Business in the real world Flashcards
What is profit?
A profit is when a business earns more cash than it spends.
What are goods?
Goods are physical objects e.g. a sandwich.
What is a service?
A service is something done for you e.g. cutting your hair.
What is the primary sector?
Produces the raw materials for production. Usually natural resources obtained from farming, mining, quarrying, fishing.
Example: diamonds and gold are mined from the ground.
What is the secondary sector?
Takes the raw materials from the primary sector and produces goods.
Example: the diamonds and gold, mined by the primary sector, are turned into jewellery.
What is the tertiary sector?
The final stage, which provides services such as sales, financial services, and distribution.
Example: the jewellery produced by the secondary sector is advertised, distributed, and sold.
What is a sole trader?
Being a sole trader means running a business as an individual, assuming complete control over decision-making and keeping all profits.
Advantages of being a sole trader?
Being your own boss, making your own decision, easy and cheap to setup, and keeping all profits.
Disadvantages of being a sole trader?
Heavy work load - you’re on your own, you may lack skills for some tasks, unlimited personal liability - you are personally responsible for business debts and legal action, difficult to raise finance, and no holidays or sick pay.
What is a partnership?
A business partnership involves two or more individuals sharing the responsibilities, risks, and profits of a business venture.
Advantages of a partnership?
Workload is shared, easier to raise finance than being sole traders, each partner can bring different skills, and may be able to cover each other’s holidays and illnesses.
Which of the four factors of production could be described as “the entrepreneur founding the business”?
Enterprise
What is a business benefit of moving production from the UK to a developing nation?
Reduced labour cost
Improving efficiency by investing in new machines and processes is called…
Technical economies of scale
What does the term “franchise” refer to in the context of business?
A business licensing another to use its brand
What is a business’s primary objective?
Maximising profits
Which of the four factors of production could be described as “ the financial resources used to produce goods and services”?
Capital
A business purchasing a competitor is an example of…
Horizontal inegration
A store earns revenue of £5,000 per month. The fixed costs are £2,000, and the variable costs per item sold are £10. How much profit does the store make if they sell 300 items?
£0
Which of the following sectors includes businesses involved in agriculture, fishing, and mining?
Primary sector
Which of the following is an example of a fixed cost for a business?
Employee salaries
