Business Activity Flashcards
What is a need?
A need is a good or service essential for living.
What is a want?
A want is a good or service which people would like to have but is not essential for living.
What is a good?
A good is a physical obeject that can be purchased.
What is a service?
A service is a non physical item that can be purchased.
What is a business?
A business is an organization which provides goods and services.
What is the economic problem?
The economic problem is that there exists unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity
What is scarcity?
Scarcity is the lack of sufficient products to fulfil the total wants of the population.
What are the factors of production?
Factors of production are the resources needed to produce goods and services. They are of limited supply.
Explain the 4 factors of production
Land - All the natural resources provided by nature.
Labour - Number of people available to make products.
Capital - Finance, machinery and equipment needed for manufacturing the goods.
Enterprise - The skill and risk taking ability of a peoron who combines the factors of production together.
What is opportunity cost?
Opportunity cost is the next best alternative given up by choosing another item.
What is specialization?
Specialization occurs when people and businesses conentrate on what they are best at.
What is Division of labour?
Division of labour is when the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialization.
Advantages of division of labour
- Increases effeiciency and output - When the workers are trained in one task they become faster.
- Less time is wasted moving for one workbench to another.
- It is quicker and cheaper to train workers as fewer skills need to be taught.
Disadvantages of division of labour
- Workers can become bored doing just one job - efficiency might fall.
- If one worker is absent and no one else can do the job, production might be stopped.
What is added value?
Added value is the difference between the selling price of a product and the cost of brought-in materials and components.
Added value is NOT the same as profit.
