Business Activity & Objectives

Question 1

What is the primary objective of most businesses?

Answer 1

To make a profit.

Question 2

Define “opportunity cost.”

Answer 2

The benefit of the next best alternative foregone when making a choice.

Question 3

What is a business objective?

Answer 3

A goal a business aims to achieve, such as profit maximization or growth.

Question 4

List three common business objectives.

Answer 4

Profit, growth, and market share.

Question 5

What is a public sector business?

Answer 5

A business owned and operated by the government.

Question 6

Define “stakeholder.”

Answer 6

An individual or group affected by a business, such as employees, customers, or shareholders.

Question 7

What is a sole trader?

Answer 7

A business owned and run by one person.

Question 8

What are the disadvantages of being a sole trader?

Answer 8

Unlimited liability, limited capital, and high risk.

Question 9

What is a partnership?

Answer 9

A business owned and run by two or more people.

Question 10

What is limited liability?

Answer 10

Owners are only responsible for business debts up to the amount they invested.

Question 11

Define “private limited company.”

Answer 11

A company whose shares are privately owned and not available to the public.

Question 12

What is a public limited company (PLC)?

Answer 12

A company whose shares can be bought and sold on the stock market.

Question 13

What is meant by “economies of scale?”

Answer 13

The cost advantages a business gains from increasing the scale of production.

Question 14

What is the difference between “profit maximization” and “profit satisficing”?

Answer 14

Profit maximization focuses on making as much profit as possible, while profit satisficing aims to make just enough to satisfy stakeholders.

Question 15

What is the tertiary sector?

Answer 15

The part of the economy that provides services, such as banking or retail.

Question 16

What is a business plan?

Answer 16

A detailed document outlining a business’s goals, strategies, and financial forecasts

Question 17

What is the primary sector?

Answer 17

The part of the economy that extracts or grows raw materials, like farming or mining.

Question 18

What is the secondary sector?

Answer 18

The part of the economy that manufactures goods from raw materials.

Question 19

What is a mission statement?

Answer 19

A brief description of a company’s fundamental purpose and values.

Question 20

What are corporate social responsibilities (CSR)?

Answer 20

Business practices that benefit society, the environment, and stakeholders beyond making a profit.

Question 21

What is “market share”?

Answer 21

The percentage of total sales in a market controlled by a business.

Question 22

What is “market growth”?

Answer 22

The increase in the size or sales of a market over time.

Question 23

Define “vertical integration.”

Answer 23

When a company takes over another at a different stage in the production process (e.g., a retailer buying a manufacturer).

Question 24

What is “horizontal integration”?

Answer 24

When a company merges with or takes over another in the same industry and stage of production.

Question 25

Define “acquisition.”

Answer 25

When one company purchases another.

Question 25

What is a merger?

Answer 25

The combination of two companies to form one larger business.

Question 26

What is a public corporation?

Answer 26

A business owned and run by the government, typically providing public services.

Question 27

What is the private sector?

Answer 27

Part of the economy owned by private individuals and businesses, not the government.

Question 28

Define “privatization.”

Answer 28

The process of transferring a business from public sector ownership to the private sector.

Question 29

What is an entrepreneur?

Answer 29

An individual who starts and runs a business, taking on financial risks in the hope of profit.