Business mid year Flashcards
Define a need
A need is a good or service essential for living
Define a want
A want is a good or service which people would like to have, but which is not essential for living.
Define scarcity
When there is unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity.
What are the four factors of production
Land labour capital and enterprise
Land
Land - is used to cover all of the natural resources provided by nature and includes fields and forests, oil, gas, metals and other mineral resources
Labour
Labour - this is the number of people available to make products
Capital
Capital - this is the finance, machinery, and equipment needed for the manufacture of goods.
Enterprise
Enterprise- this is the skill and risk taking ability of the person who brings the other resources or factors of production together to produce a good or service, e.g the owner of the business. These people are called entrepreneurs
Define opportunity cost
Opportunity costs is the next best alternative given up by choosing another item.
Define specialisation
Specialisation occurs when people and businesses concentrate on what they are best at
Define division of labour
Is when production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.
Added value
Is the difference between the selling price of a product and the cost of brought in materials and components
Why is added value important
can pay other costs e.g management expenses and costs including ads and power.
May be able to make a profit if these other costs come to a total that is less than the added value.
Define primary sector
The industry that extracts and uses the natural resources of earth to produce raw materials used by other businesses.
e.g oil, copper, fishing etc
Define secondary sector
The industry that manufactures goods using the raw materials provided by the primary sector e.g building and construction, aircraft etc.
