Chapter 1

Question 1

Define Business Activity

Answer 1

The process of producing goods and services to satisfy customer’s demand.

Question 2

Define Scarcity

Answer 2

There are not enough goods and services to meet the wants of the population.

Question 3

Define Opportunity cost

Answer 3

The next best alternative given up by choosing another item.

Question 4

Define Factors of production

Answer 4

The resources needed to produce goods and services - Land, labour, capital and enterprise.

Question 5

Define specialisation

Answer 5

People or businesses concentrate on what they are best at.

Question 6

Define division of labour

Answer 6

Production is divided into seperate task and each worker does just one of those task.

Question 7

How business increase added value?

Answer 7

1. Increase the Selling price
   - Create higher quality image through advertising and promotional activities (branding)
   - Packaging
   - Provide excellent quality service
   - Decoration of a shop in a very up market
   - Provide more features and functions on the products
   - Convenience
2. Reduce the cost of brought in materials but keep the selling price the same.
   - **Bulk purchasing **to obtain discount.