Business activity

Question 1

define Need

Answer 1

a good or service essential for living.

Question 2

define wants

Answer 2

a good or service that people would like to have, but is not required for living

Question 3

define Scarcity

Answer 3

is the basic economic problem. It is a situation that exists when there are unlimited wants and limited resources to produce the goods and services to satisfy those wants

Question 4

define Opportunity cost

Answer 4

the next best alternative forgone by choosing another item. Due to scarcity, people are often forced to make choices.

SCARCITY → CHOICE → OPPORTUNITY COST

Question 5

what is the Purpose of Business Activity

Answer 5

Businesses attempt to solve the problem of scarcity, using scarce resources, to produce and sell those goods and services that consumers need and want.

Question 5

define Specialization

Answer 5

Specialization occurs when a person or organisation concentrates on a task at which they are best at.

Question 6

Factors of Production

Answer 6

Factors of Production are resources required to produce goods or services.
these are:-
1. Land: the natural resources that can be obtained from nature.
2. Labour: the physical and mental efforts put in by the workers in the production process. The reward for labour is wage/salary
3. Capital: the finance, machinery and equipment needed for the production of goods and services. The reward for capital is interest received on the capital
4. Enterprise: the risk taking ability of the person who brings the other factors of production together to produce a good or service. The reward for enterprise is profit from the business.

Question 7

Advantages and Disadvantages of Specialization

Answer 7

Advantages:

• increasing efficiency as Workers are trained to do a particular task.
• Saves time and energy
• Quicker to train labourers: workers only concentrate on a task, they do not have to be trained in all aspects of the production process
• Skill development: workers can develop their skills as they do the same tasks repeatedly, mastering it.

Disadvantages:

• boring for workers, doing the same tasks repeatedly
• Higher labour turnover as the workers may demand for higher salaries and company is unable to keep up with their demands
• Over-dependency: if worker(s) responsible for a particular task is absent, the entire production process may halt since nobody else may be able to do the task.

Question 7

define Business

Answer 7

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

Question 8

what is Added Value?

Answer 8

Added value is the difference between the cost of materials bought in and the selling price of the product.

Question 9

How to increase added value?

Answer 9

1. Reducing the cost of production.
2. Raising prices

Question 10

problems with added value

Answer 10

To lower cost of production, cheap labour, raw materials etc. may have to be employed, which will create poor quality products and only lowers the value of the product. People may not buy it. And when prices are raised, the high price may result in customer loss, as they will turn to cheaper products.

Question 11

why is added value imp?

Answer 11

1. to pay other costs
2. to make a profit