Business activity Flashcards
what are the 4 factors of production?
land, labour, capital and enterprise
what does land mean?
all of the natural resources provided by nature. e.g fields, forests, oil, gas, metals and other mineral resources
what does labour mean?
number of people available to make products.
what does capital mean?
the finance, machinery and equipment needed for the manufacture the goods and services
what does enterprise mean?
the skill and the risk-taking ability of the person who brings the other factors of production together to produce a good service. these people are called entrepreneurs.
definition of a need
a good or service essential for living
definition of a want
a good or service which people would like to have, but which is not essential for living. (people’s wants are unlimited)
definition of economic problem
the existence of unlimited wants but limited resources and services to satisfy those wants. this creates scarcity.
definition of scarcity
the lack of sufficient products to fulfil the total wants of the population.
definition of opportunity cost
the next best alternative given up by choosing another item
definition of division of labour
when the production process is split up into different tasks and each worker performs one of these tasks.
definition of specialisation
occurs when people and businesses concentrate on what they are best at
definition of businesses
combine factors of production to make products which satisfy people’s wants
definition of added value
the difference between the selling price of product and the cost of bought-in materials and components
what is the primary sector
extracts and uses the natural resources of Earth to produce raw materials used by other businesses. e.g farming, fishing and extraction of natural materials
what is the secondary sector
manufactures goods using the raw materials provided by the primary sector. e.g building construction, baking, computer assembly.
what is the tertiary sector
provides services to consumers and the other sectors of industry. e.g transport, insurance, banking.
definition of de-industrialisation
occurs when there is a decline in the importance of the secondary sector of industry. leads to stopping the business, stopping the primary and secondary sector.
definition of private sector
business not owned by the government. has the right to make decisions, likely to be some government controls. e.g construction , financial service
definition of public sector
business owned and controlled by the government. e.g public transport, healthcare
definition of an entrepreneur
a person who organises, operates and takes risk for a new business venture
definition of mixed economy
having both a private and public sector
definition of a business plan
a document containing the business objectives and important details about the operation, finance and owners of the business
definition of external growth
when 2+ businesses joins together to operate as 1 business. occurs through mergers or takeovers
