Chapter 1.1 Business Activity Flashcards
Need
Goods or services that is essential for living
Want
Goods or services that people wants but not essential for living
Economic problem
Unlimited wants but limited resources
Scarcity
Unlimited wants+limited resources
Cause of scarcity
Not enough factors of production to make all goods and services
Factors of production( the resources)(important assets)
Land-natural resources (materials)
Labour-people available to make products (workers)
Capital-finance, machinery and equipments (things needed to process the materials)
Enterprise-someone that brings the factors of production together to produce a good or service (a businesss being brought together)
Opportunity cost
An alternative given up by choosing another item
Happens when resources are scare , when you make a choice
Division of labour
When production process is split up into different sections and each worker performs their own tasks.
Form of specialisation
Advantage of division of labour(specialisation)
- increases efficiency and output
- quicker( and cheaper(only focus on one job and not multi-tasking) to train workers
Disadvantage of division of labour(specialisation)
- Workers becomes bored by just doing one job (efficiency might fail)
- over dependency
- higher labour turnover
Business
To make products of goods or services that statisfy people’s wants combining with the factors of production
Added value
Difference between selling price and the cost of a product
Hard to increase added value , increasing selling price =lower sales , lowering cost price=lower quality
Uses of added value
pays off costs - labour costs, management expenses and other costs
Methods of increasing added value
Reduce cost of production- might result in the quality of the product
Increase selling price-might have lower sales unless it is worth it’s price
Specialisation
Occurs when people or businesses concentrate on what they are best at
