business chapter 1 definitions (business activity)

Question 1

need

Answer 1

is a good or service essential for living

Question 2

want

Answer 2

is a good or service not essential for living. People wants are unlimited.

Question 3

economic problem

Answer 3

unlimited wants but limited resources to produce the goods and services to satisfy those wants.

Question 4

factors of production

Answer 4

are resources needed to produce goods and services. (land, labour, capital, enterprise)

Question 5

scarcity

Answer 5

is the lack of sufficient products to fulfil the total wants of the population

Question 6

opportunity cost

Answer 6

is the next best alternative given up by choosing another item.

Question 7

specialisation

Answer 7

occurs when people and businesses concentrate on what they are best at.

Question 8

division of labour

Answer 8

is when the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.

Question 9

businesses

Answer 9

combines factors of production to make goods and services which satisfy people’s wants.

Question 10

added value

Answer 10

is the difference between the selling price of a product and the cost of brought in materials and components.