Business

Question 1

What is MARKET ECONOMY?

Answer 1

Where we have a situation where there is a buyer and a seller who are in contact and there is a means of exchange. Demand and supply will dictate the means of exchange

Question 2

What is OPPORTUNITY COST?

Answer 2

the lost alternative use to which the economic resources could have been allocated. When the option of taking up one opportunity arises this means you lose all other options.

Question 3

What is CUSTOMER SOVEREIGNITY?

Answer 3

As a consumer demands to buy a product,the entrepreneur coordinates land, labour and capital resources to make the goods. The consumer is ‘king’ in deciding where resources are allocated in a market economy.

Question 4

What is the TARGET MARKET?

Answer 4

the group to which a business is specifically aiming its products or service. Choosing the right location plays a part in this as a high priced gourmet shop wouldn’t suit a suburb with high unemployment rates.

Question 5

What are GOODS AND SERVICES?

Answer 5

Goods are physical, tangible objects, natural or manufactured that have a price in the market such as food, clothing, land or machines. Services are intangible activities provided by another person such as a hairdresser, doctor or dentist.

Question 6

What is SCARCITY?

Answer 6

the problem of limited resources being available to satisfy unlimited wants.

Question 7

What are ECONOMIC RESOURCES?

Answer 7

The inputs required by the producer to complete the production process. These resources are land, labour, capital and enterprise.

Question 8

What is SOLE PROPRIETORSHIP?

Answer 8

the owner being in direct control of all elements and is legally accountable for the finances of the business. The business is owned by one person; keeping all profits for themselves and making all decisions about the running of the business.

Question 9

What is the PROFIT?

Answer 9

revenue-expenses. the revenue earned by the business over a period of time, less expenses incurred in eating that revenue.

Question 10

What is BUSINESS ETHICS?

Answer 10

the moral guidelines and principles a business should follow to promote just behaviour and practises. It provides a basic framework that businesses can choose to follow to gain public acceptance.

Question 11

What is EQUILIBRIUM PRICE?

Answer 11

contains enough profit to motivate producers to make the product and consumers are willing to spend their money on the product. When the price and quantity is determined, this leads to the most effective use of resources as the quantity produced is likely to be the quantity sold.

Question 12

What is ECONOMICS?

Answer 12

allocating scarce resources to satisfy unlimited wants. It deals with the production, distribution and consumption of goods and services.

Question 13

What is the LAW OF DEMAND?

Answer 13

this states that as the price of a product increases, demand for that product decreases and as the price of a product decreases, demand for that product increases. In other words, consumers are more inclined to purchase a product when the price is low.

Question 14

What are the FACTORS OF DEMAND?

Answer 14

elements that influence customer willingness and ability to pay. These factors are price, income, substitute product, complementary complementary product, preferences and expectations.

Question 15

What is the LAW OF SUPPLY?

Answer 15

this states that as the price of a product increases, the producers willingness to supply also increases. If the price of a product decreases, the producer is less willing to produce as they re not making as much profit.

Question 16

What are the FACTORS OF SUPPLY?

Answer 16

The elements that influence the supplier and their willingness and ability to supply goods and services. These include price of inputs, availability of resources and price of other products

Question 17

STARTING A BUSINESS FROM SCRATCH

Answer 17

you are able to put your own personal touch on the business and choose staff that are up to your standards. You however need to find your own suppliers, spend time interviewing staff and fitting out the business. This would also be risky as you have to set up your own customer base and Goodwill.

Question 18

EXISTING BUSINESS

Answer 18

this is already established with its own customer base; fittings, fixtures and stock are already set up and its fairly easy as you walk in and pretty much start selling. An existing business could be bad to purchase as it would be expensive due to Goodwill, have a negative reputation and employees may not be up to your standards.

Question 19

What are the ECONOMIC QUESTIONS?

Answer 19

WHAT TO PRODUCE? This depends on the demand of the consumer and satisfying their needs

HOW TO PRODUCE? decide on the production process and the combination of resources needed for the g/s to be produced

FOR WHOM TO PRODUCE? who will benefit from the production of the g&s? this could include farmers, consumer, producer, employees and even the government.

Question 20

What are the ECONOMIC RESOURCES?

Answer 20

LAND-natural resources that come from the earth.
LABOUR- human effort which assists in creating the product (workers)
CAPITAL-machinery,tools, transport and equipment used in the production process
ENTERPRISE- people/group with the money/skills to combine economic resources and create a product.

Question 21

Difference between NEEDS AND WANTS

Answer 21

needs are any item necessary for survival in everyday life such as food, water, shelter etc. Wants are any item people desire but isn’t essential to everyday life such as mobile phones and holidays.

Question 22

What is a BUSINESS PARTNERSHIP?

Answer 22

The business being owned by 2-20 people. any income is split between the partners and the workload is shared. This form of ownership could have its downsides as disagreements could occur about the running of the business and there is unlimited liability.

Question 23

What is a PRIVATE COMPANY?

Answer 23

The business having between 1-50 shareholders. Limited liability (personal assets aren’t affected) and easier access to finance. It is also more expensive to register the companys name, less say in the day to day running of the business and accounting fees are higher.