Ch 1 - Business activity

Question 1

Advantages of specialisation and division of labour

Answer 1

Efficiency, Output, Quicker, Cheaper - Increased CEO of Q

Question 2

Disadvantages of specialisation and division of labour

Answer 2

Dependent, Efficiency can ball because of Boredom. BED

Question 3

Why is added value important

Answer 3

» So that businesses can pay other costs - eg labour, advertisement, etc

» Could make a profit if total costs < added value

Question 4

2 ways to increase added value

Answer 4

Increase selling price but keep cost of raw materials same

Same selling price but reduce cost of raw materials.

Question 5

Analyse Increase selling price but keep cost of raw materials same for increasing added value

Answer 5

adv:
may think its higher quality - better brand image - more profits

disadv:
other costs may rise tryna make a better brand image - lower profit
may alienate some potential customers - lose out on them - lower profit
if product is price elastic - may lose a lot of customers

Question 6

Analyse Same selling price but reduce cost of raw materials same for increasing added value

Answer 6

adv:
higher gross profit margin - therefore more profits per unit

disadv:
quality of product may take a hit - negatively impact brand image - lose customers - lower profit