Chapter 1 - Business Activity Flashcards
Business Activity
The process of producing goods and services to satisfy consumer demand
Need
A good or service essential to living
Want
A good or service which people would like but is not essential for living
Economic Problem
Unlimited wants cannot be met because there are limited factors of production/resources. This creates scarcity
Factors of Production
The resources needed to produce goods and services - land, labour, capital enterprise
Opportunity Cost
The benefit that could have been gained from an alternative use of the same resource.
(The next best alternative foregone)
Scarcity
A situation where there are not enough resources or goods and services needed to meet the wants of the population
Specialisation
When people and business focus on what they do best
Division of Labour
When production is divided into separate tasks and each employee does just one of those tasks
Consumer Goods
Products which are sold to the final consumer. They can be seen and touched
Consumer Services
Non-tangible products
Capital Goods
Physical goods used by other businesses to help produce other goods and services
Added Value
The difference between the selling price of a product and the cost of the raw materials used to produce it. It represents the additional worth created through the production process
