Chapter-1: Business Activity Flashcards
What is need?
It is a good or service that is essential for living.
What is want?
It is a good or service that consumers would like to have but which is not essential for living.
What is the economic problem?
Unlimited wants exceeding finite resources.
What are factors of production? Name them.
Factors of production are resources needed to produce goods or services. There are four factors of production and they are in limited supply. They are land, labor, enterprise and capital.
What is opportunity cost?
The next best alternative forgone.
What is specialization?
Specialization is when people and businesses concentrate on what they are best at.
What is the division of labor?
It is when the production process is split up into different tasks and each worker performs one of the tasks. It is a form of specialization.
What is the purpose of businesses?
They combine factors of production to make products that satisfy people’s wants.
What is added value?
It is the difference between the selling price of a product and the cost of bought-in materials and components.
