Business - 1.1, 1.2

Question 1

business

Answer 1

any organization that uses all the factors of production to create goods and services to satisfy human wants and needs

Question 2

economic problem

Answer 2

unlimited wants and need but limited resources which leads to scarcity

Question 3

opportunity cost

Answer 3

the next best alternative given up when making a decision

Question 4

4 types of factors of production

Answer 4

• land
• labour
• capital
• enterprise

Question 5

factors of production

Answer 5

• resources needed to produce good and services
• limited in supply

Question 6

need

Answer 6

good or service essential for living

Question 7

want

Answer 7

good or service people would like to have

Question 8

specialisation

Answer 8

• occurs when people and businesses concentrate on what they are best at

Question 9

division of labour

Answer 9

• production process being split up into different tasks
• each worker focuses on one task

Question 10

added value

Answer 10

• difference between selling price and cost of production

Question 11

importance of added value

Answer 11

• pay other costs (labour, management expenses, marketing)
• increase profit

Question 12

how to increase added value

Answer 12

• increase selling price but keeping the cost of production the same

vice versa

Question 13

primary sector

Answer 13

• industry that extracts and uses natural resources of the earth
• first stage of economic actvity

eg. forestry, farming, mining

Question 14

secondary sector

Answer 14

• industry manufacturing goods using raw materials provided by the primary sector
• second stage of economic activity

eg. constructing, car manufacturing, bread baking

Question 15

tertiary sector

Answer 15

• industry that provides services to consumers
• final stage of the economic activity

eg. retail, hotels, hairdressing

Question 16

industrialisation

Answer 16

• the process of transforming the economy of a nation to focus on the secondary sector rather than the primary sector

Question 17

de-industrialisation

Answer 17

• occurs when there’s a decline in the importance of the secondary sector, then making them focus on the tertiary sector

Question 18

reasons for industrialisation

Answer 18

• sources of some primary products have depleted
• job creation
• participate in international trade

Question 19

reasons for de-industrialisation

Answer 19

• losing competitiveness to industrialized countries
• countries consumers rather spend on other goods and services rather than manufactured products
• social issues (reduce child labour)

Question 20

private sector

Answer 20

• run by private individuals or groups
• main objective is to make profit

Question 21

public sector

Answer 21

• run and funded by government

eg. healthcare, education, defense

Question 22

mixed economy

Answer 22

• economic system combining private and public enterprise

Question 23

command economy

Answer 23

• government makes most of the major decisions
• government controls the means of production

Question 24

market economy

Answer 24

• production and distribution of goods and services are determined by the forces of supply and demand.
• mostly private businesses

Question 25

advantages of private sector

Answer 25

• high efficiency
• competition is encouraged
• increases innovation
• development of better quality products (competition)

Question 26

disadvantages of private sector

Answer 26

• production of harmful / illegal goods for profits
• possible exploitation of workers
• loss of jobs

Question 27

advantages of public sector

Answer 27

• funded by government
• job creations
• public good provided

Question 28

disadvantages of public sector

Answer 28

• low efficiency (maybe low wages)
• no motivation to work
• no competition = low quality

Question 29

nationalisation

Answer 29

• government taking over a privately run business/industry
• loss of thousands of jobs and income

Question 30

privatisation

Answer 30

• transfer of ownership, management and control of a public sector enterprises to a private sector