Chapter 1-busniess Activity

Question 1

What is a need

Answer 1

A good essential for living

Question 2

What is a want

Answer 2

A good or service people would like to have but is not essential for living. People’s wants are unlimited

Question 3

What is the economic problem

Answer 3

Unlimited wants but limited resources to produce the goods that satisfy those wants. This creates scarcity

Question 4

Needs eg. (5)

Answer 4

Water
Shelter
Food
Clothing
Healthcare

Question 5

What are the 4 factors of production

Answer 5

Labour
Land
Capital
Enterprise

Question 6

What is the economic problem caused by and what does it lead to

Answer 6

Lack of factors of production
Scarcity

Question 7

What are factors of production

Answer 7

Resources needed to provide goods/services. 4, limited supply

Question 8

What is land

Answer 8

Resources provided by nature

Question 9

What is labour

Answer 9

The number of people available to produce goods/services

Question 10

What is capital

Answer 10

The finance/equipment,skill and machinery needed to start a business

Question 11

What is enterprise

Answer 11

The skill+risk taking ability of someone to bring the factors of production together to start a business(entrepreneurs)

Question 12

What is scarcity

Answer 12

The lack of sufficient products to fulfill a populations total wants

Question 13

What is opportunity cost
What is important to ensure

Answer 13

The giving up of an item for the next best alternative. the next best alternative given up by choosing another item.
That the new item has a lower price than the original

Question 14

Eg of opportunity cost for:
Individual
Business
Government

Answer 14

Holiday/car
Software/printer
School/hospital

Question 15

What is specialization

Answer 15

When people/a business concentrate on what they are best at

Question 16

Why is spécialisation common? (3)

Answer 16

Spécialiséd machinery+tech
People réalisé higher living standards result from being specialised
Increased competition-need to keep costs low

Question 17

What is another name+definition for spécialisation in the workplace

Answer 17

Division of labour
When the production process is divided into different stages enabling workers to specialize in specific tasks

Question 18

What are advantages of spécialisation (5)

Answer 18

Higher output
Raised quality
Variety
Higher market-increase in global trade
Competition keeps prices low

Question 19

Disadvantages of specialisation (2)

Answer 19

Workers become bored-efficiency fails
Production is haltered if worker is absent

Question 20

What does business activity do (3)

Answer 20

Combines scarce factors of production
Produces goods and services
Employs people

Question 21

What is added value

Answer 21

The difference between the selling price of the product and the cost of bought in materials and components

Question 22

What happens if there is no added value

Answer 22

No profit will be made
Other costs can’t be paid for

Question 23

Why is added value important

Answer 23

Can pay other costs such as labour, management expenses etc.
May be able to make a profit if these other costs come to a total that is less than the added value

Question 24

2 ways a business can increase added value+disadvantages

Answer 24

1.raising selling price/image-might raise cost price, slow business
2.lowering cost price-lower quality materials