Chapter 5- why start a business

Question 1

Investment

Answer 1

Means spending now in order to generate income in the future

Question 2

Incentives

Answer 2

Are financial and other rewards that can induce people to behave in a certain way. The prospect of profit acts as an incentive that encourages businesses to produce more or to develop a new or different product.

Question 3

Factors of production

Answer 3

Are land, labour and capital, the essential inputs into the production process. Together they contribute the value added to the output, which makes it saleable in the market place.

Question 4

Enterprise

Answer 4

(Fourth factor of production) it is fundamental to the organisation of the economic activity and willingness to take risks in return for profit

Question 5

Labour

Answer 5

Means human effort contributing to production

Question 6

Land

Answer 6

Means space where the production can be located but it also refers to the natural resources that are inputs to the production process. Landowners receive rent.

Question 7

Capital

Answer 7

Includes premises and equipment that are used repeatedly in production. Owners of capital receive interest or dividends.

Question 8

Social entrepreneurs

Answer 8

Use business methods and strategies to achieve social objectives. They seek innovative solutions to difficult social problems