Chapter 1- understanding business activity

Question 1

need

Answer 1

things that are essential for living in order to survive, eg shelter, food, clothing

Question 2

want

Answer 2

things that people would like to have, but is not essential for living

Question 3

oppotunity cost

Answer 3

the next best alternative given up by choosing another item

Question 4

scarcity

Answer 4

limited avaibility of resources to meet unlimited wants of people

Question 5

specialisation

Answer 5

when the business/people focus on the activities that they are the best at

Question 6

added value

Answer 6

the difference between selling price and the cost of raw materials used to make it

Question 7

primary sector

Answer 7

business that extract or collect raw materials

Question 8

secondary sector

Answer 8

business that take raw materials and manufacture them into finished goods

Question 9

tertiary

Answer 9

business that provide services to other businesses and individuals

Question 10

public sector

Answer 10

any business that runs,owned or controlled by the government

Question 11

private sector

Answer 11

any business run, owned or controlled by private individuals

Question 12

public corperation

Answer 12

a business organization run, owned by the government

Question 13

entrepreneur

Answer 13

someone who organises, operates and takes the risk for a new business venture

Question 14

business plan

Answer 14

contains aims of a business and objectives of a business and important details about its operations, finance and owners

Question 15

partnership

Answer 15

a business controlled and owned by two or more people

Question 16

sole trader

Answer 16

a business owned and controlled by one person only

Question 17

shareholder

Answer 17

any individual/organization that own shares in a business

Question 18

incorporated business

Answer 18

a business that exists seperately from its business

Question 19

unincorporated business

Answer 19

a business that do not have a seperate legal identity

Question 20

limited liability

Answer 20

owners are only liable for the amount invested in the business

Question 21

unlimited liability

Answer 21

owners responsible for all the debts of the business

Question 22

private limited company

Answer 22

a business whose shares cannot be sold to the public

Question 23

public limited company

Answer 23

a business who shares can be freely bought and sold to the general public

Question 24

franchise

Answer 24

an agreement for a business to trade under the name of another business to sell the other company’s products or services

Question 25

joint venture

Answer 25

an enterprice undertaken by two or more businesses pooling resources together to work on a specific project

Question 26

objective

Answer 26

a target that a business wants to reach so that it can achieve its aims

Question 27

skateholder

Answer 27

any group of the individuals who have any interest of the activities in the business

Question 28

social enterprise

Answer 28

an organization that put social objectives ahead of the financial objectives