chapter 1 Flashcards
define needs
a good/service essential for living
define wants
a good/service not essential but people would like to have
what are the factors of production
land:natural resources
labor:mental and physical efforts of people put toward the business
capital:finance and machinery needed
enterprise:risk taking ability
define opportunity cost
next business alternative given up by choosing another item
define specialization
when the production process is split into different tasks 1 worker-1 task
advantages of specialization
1.less mistake
2.less waste
3.efficiency:best use of resources
4.higher productivity
5.faster
6.higher quality
disadvantages of specialization
1.boredom->less motivation
2.absence of workers could stop the whole production process
what is scarcity/economic problem
unlimited wants but limited resources
define added value
selling price-cost of material bought
how to increase added value
1.increasing selling price, not affordable and customers can find alternatives
2.decrease cost of material bought, compromise quality
how to satisfy customers when increasing selling price
1.branding
2.more features
3.high quality
4.convenience
types of products
consumer product
producer product
