Chapter 1 Definitions Flashcards
Added Value
The value of outputs minus the value of inputs
Opportunity Cost
It is the best alternative that is foregone when making a desicion
Factors of Production
The resources such as Land, Labor, Capital, Enterprise used to produce a good or service
Specialisation
This is a production process where a business concentrates on a particular good or service
Division of Labor
This involves breaking up of a job into several smaller tasks and distributing and assigning the tasks to various people within the organisation
Primary Sector
It is a sector, where a business is involved with the extraction, harvesting, farming etc from natural resources
Secondary Sector
It is a sector, where a business is involved with the conversion of raw materials into finished goods
Tertiary Sector
It is a sector, where a business provides services to their private and corporate customers
Private Sectors
It is a form of business owned and managed by private individuals and organisations with an objective to make profit
Public Sector
It is a form of business owned and managed by the government with the main objective being social welfare
Limited Liability
It is the extent to which owner can be made liable in case the
business goes into bankruptcy. The liability will be only restricted to the amount of capital invested by them.
Unlimited Liability
In case a business goes bankrupt, the owner’s liability will be
personal. The personal assets and properties of the owner can be taken away to repay the debt.
Vision Statement
It refers to an organisation’s long term aspirations, i.e., where
it ultimately wants to be
Mission Statement
It refers to the declaration of an organisation’s overall purpose. It explains what the business is trying to achieve and outlines the organisation’s values.
Aims
These are long term goals of an organisation stating its purpose and intentions usually expressed in qualitative terms.
