business activity

Question 1

Need

Answer 1

A good or service essential for living

Question 2

Want

Answer 2

A good or service which people would like to have but which is not essential for living. These are unlimited

Question 3

Economic Problem

Answer 3

Results from their being unlimited wants but limited resources to provide the goods and services to satisfy these wants. This creates scarcity

Question 4

Scarcity

Answer 4

The lack of sufficient products to satisfy the total wants of the population

Question 5

Opportunity Cost

Answer 5

The next best alternative given up by choosing another item

Question 6

Factors of Production

Answer 6

The resources need to produce goods or services. There are four and are in limited supply

Question 7

Land

Answer 7

the natural resources that can be obtained from nature. This includes minerals, forests, oil and gas. The reward for land is rent.

Question 8

Labour

Answer 8

the physical and mental efforts put in by the workers in the production process. The reward for labour is wage/salary

Question 9

Capital

Answer 9

man-made goods used in production. The reward for capital is interest

Question 10

Enterprise

Answer 10

the risk taking ability of the person who brings the other factors of production in production. The reward for enterprise is profit from the business.

Question 11

Division of Labor/Specialization

Answer 11

is when the production process is split up into different tasks and each worker performs one of those tasks.

Question 12

Advantages of specialization

Answer 12

Advantages:

increasing efficiency and output : leading to economies of scale

cheaper: if production increases and its faster

Saves time and energy: production is faster

Quicker to train labourers

Skill development: workers can develop their skills reducing mistakes

Question 13

Disadvatages of specialization

Answer 13

Disadvantages:

It can get monotonous/boring for workers : effeciency may fall

Over-dependency: Employees have to rely on each other to produce products, leading to a fall in productivity

Question 14

Purpose of Business Activity

Answer 14

Business is any organization that uses all the factors of production (resources) to create goods and services to satisfy human wants and needs.

Question 15

Added Value

Answer 15

Added value is the difference between the selling price and the cost of bought-in materials and components

Question 16

how to add value

• to survive against competitors

Answer 16

quality
design
convenience
speed
USP
brand image