Chapter 1 - Understanding Business Activity Flashcards
what is business activity?
the process of producing goods and services to satisfy consumer demand
what is a need?
a good or service which is essential for living
what is a want?
a good or service which people would like to have but is not essential for living
what is the economic problem?
unlimited wants can not be met due to limited factors of production which creates scarcity
what are the factors of production?
the resources needed to produce goods and services which are land, labour, capital and enterprise
what is scarcity?
there aren’t enough goods and services to meet the wants of the population
what is meant by opportunity cost?
the benefit that could have been gained from an alternative use of the same resource
what is meant by the term specialisation?
people and businesses concentrate on what they are best at
what is division of labour?
when production is divided into separate tasks and each employee does just one of those tasks
what are consumer goods?
products which are sold to the final consumer - they can be seen and touched for example computers and food
what are consumer services?
non-tangible products such as insurance services and transport
what are capital goods?
physical goods such as machinery and delivery vehicles used by other businesses to help produce other goods and services
