Chapter 1-Business Activity

Question 1

Define a need

Answer 1

Goods or services that are essential for survival

Question 2

Define a want

Answer 2

Goods or services customer desire but are not essential or survival

Question 3

Define economic growth

Answer 3

Exists when there are unlimited wants but limited resources to satisfy the wants

Question 4

Define scarcity

Answer 4

It is the lack of sufficient products to fulfil the total wants of the production

Question 5

Define the term factors of production and state the 4 factors of production

Answer 5

They are resources needed to produce goods and services by the business

4 factors of production:
-land-natural resources used in production
-labour-work done by employees-physical and mental work
-capital-finance and machinery
-enterprise-individuals who coordinate the 3 other factors, make decisions and take risks

Question 6

Define specialisation

Answer 6

When people and businesses focus on what they are best/good at

Question 7

Define division of labour

Answer 7

When production is split into different tasks, and each worker performs one of these tasks. It’s a form of specialisation

Question 8

What are the advantages and disadvantages of division of labour (specialisation)

Answer 8

Advantages
-workers are trained in one task and specialise in this, increasing productivity and efficiency
-specialisation with division of labour will result in better quality output
-An increase in efficiency will lead to economies of scale
-workers become more skilled and experienced, reducing waste of time and resources

disadvantages
-repetitive tasks can cause boredom and burnout for employees, reducing motivation and job efficiency
-if a worker is not present, production will be disrupted, causing a waste of time and resources as well as less output and efficiency
-specialised workers require higher wages, and training current employees will increase costs

Question 9

Define the term businesses

Answer 9

Businesses combine the scarce factors of production to produce goods or services to satisfy people’s needs and wants

Question 10

define needs

Answer 10

goods or services that are essential for survival

Question 11

define wants

Answer 11

goods or services customers desire but are not essential for survival

Question 12

define economic problem

Answer 12

Exists when there are unlimited wants but limited resources to satisfy the wants

Question 14

What are the 3 purposes of business activity

Answer 14

-combine scare factors of production
-produce goods or services
-employes people