Business Activity Flashcards
Need
A good or service that is essential for living.
Want
A good or service which people would like to have, but is not essential for living. People’s wants are unlimited.
What is the economic problem?
There are unlimited wants, but limited resources to produce the good and services to satisfy those wants (this creates scarcity).
Scarcity
The lack of sufficient materials to fulfill the wants of the entire population.
Factors of production
The resources needed to produce goods and services.
What are the four factors of production?
- Land
- Labour
- Capital
- Enterprise
Land
All the natural resources provided by nature (for example: fields, forests, oil, gas, metals etc.).
Labour
The number of people available to produce products.
Capital
The finance, machinery and equipment needed for the manufacture of goods.
Enterprise
The skill and ability of the person who brings the factors of production together to produce a good or service (for example: a business owner).
Opportunity cost
The benefit that could have been gained from an alternate use of the same resource.
Specialization
People and businesses concentrate on what they are best at.
Division of labour
Production is divided into separate tasks and each worker does just one of those tasks.
Primary sector
The primary sector of industry extracts and uses the natural resources of the earth to produce raw materials used by other businesses.
Secondary sector
The secondary sector of industry manufactures goods using raw materials provided by the primary sector.
Tertiary sector
The tertiary sector of industry provides services to consumers and the other sectors of the industry.
De-industrialization
It occurs when there is a decline in the importance of the secondary, sector of industry in a country.
Mixed economy
A mixed economy has both a private and a public sector.
Private sector
Businesses not owned by the government.
Public sector
Government owned and controlled businesses and organizations.
Entrepreneur
An entrepreneur is a person who organizes, operates and takes the risk for a new business venture.
Business plan
A document containing them business objectives and important details about the operations, finance and owners of the new business.
Value
How much something is worth.
Business size
Measured by:
- Number of employees
- Value of output
- Value of sales
- Value of capital employed
