Buisness Activity (Keywords) Flashcards
Define Need
A need is a good or service essential for living
Define Want
A want is a good or service which people would like to have, but which is not essential for living. People’s wants are unlimited
Define Economic Problem
Economic Problem- There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity
Define Factor of Production
Factors of production are those resources needed to produce goods and services. There are four factors of production and they are in limited supply
Define Scarcity
Scarcity is the lack of sufficient products to fulfill the total wants of the population
Define Opportunity Cost
Opportunity cost is the next best alternative given up by choosing another item
Define Specialisation
Specialization occurs when people and businesses concentrate on what they are best at
Define Division of Labour
Division of labour is when the production process is split up into different tasks and each worker performs one of those tasks. It is a form of specialization
Define Added Value
Added value is the difference between the selling price and the cost of bought-in materials and components
Define Primary Sector
The primary sector of industry extracts and uses the natural resources of Earth to produce raw materials used by other businesses
Define Secondary Sector
The secondary sector of industry manufactures goods using the raw materials provided by the primary sector
Define Teritary Sector
The tertiary sector of industry provides services to consumers and other sectors of industry
Define De-industrialisation
De -industrialisation occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country
Define Capital
Capital is the money invested into the business by the owners
Define Entrepreneur
An entrepreneur is a person who organises, operates and takes the risk for a new business venture
Define Capital Employed
Capital employed is the total value of capital used in the business
Define Internal Growth
Internal Growth occurs when a business expands its existing operations
Define External Growth
External Growth is when a business takes over or merges with another business. It is often called integration as one business is integrated into another one
Define Merger
A merger is when the owners of two businesses agree to join their businesses together to make one business
Define Horizontal Integration
Horizontal integration is when one business merges with or takes over another one in the same industry at the same stage of production
Define Vertical Integration
Vertical integration is when one business merges with or takes over another one in the same industry but at a different stage of production. Vertical integration can be forward or backward.
Define Conglomerate integration
Conglomerate integration is when one business merges with or takes over a business in a completely different industry. This is also known as diversification.
Define Limited Liability
Limited liability means that the liability of shareholders in a company is limited to only the amount they invested
