chapter 6-10 business opportunities

Question 1

public sector

Answer 1

organisations that are run by the government

Question 2

private sector

Answer 2

businesses that are run by shareholders or individuals that want to make a profit

Question 3

public goods

Answer 3

good that are provided by the government

Question 4

non-excludability

Answer 4

cant prevent someone from using it

Question 5

non-rivalry

Answer 5

the consumption of this good or service doesn’t stop someone else using it

Question 6

merit goods

Answer 6

goods or services that are provided by both the public and private sector

Question 7

positive externalities

Answer 7

there are positive effects on not just the person how consumes the good but on other people as well

Question 8

market share

Answer 8

percent of the total revenue

Question 9

shareholder value

Answer 9

the return the investors get from investing in the business

Question 10

sole trader

Answer 10

a business that is owned and run by one person
-there is no legal distinction between the owner and business

Question 11

partnership

Answer 11

set up by the deed of partnerships, which sates the share of profits and losses
-no legal distinction

Question 12

limited liability

Answer 12

shareholders are only liable to for the loose the amount they invested into the business

Question 13

incorporation

Answer 13

separate legal identity to the company in the eyes of the law

Question 14

partnership agreement

Answer 14

a document that sets out the rules and regulations
-amounts invested
-share of profits
-roles and responsibilities
-voting shares

Question 15

labour

Answer 15

cost of employees, availability
and skills of employees

Question 16

transfer costing

Answer 16

when a business inflates there profits in a country with low tax and decreases profits of a country of low tax

Question 17

trade credit

Answer 17

buy now pay later

Question 18

factoring

Answer 18

when a business sells their unpaid invoices

Question 19

leasing

Answer 19

a monthly payment for an asset theyll never own

Question 20

hire purchase

Answer 20

a monthly payment for an asset that theyll own at the end of the period

Question 21

sale and leaseback

Answer 21

selling a business asset to a finance company then leasing it back
-able to get a lump some of money they can invest

Question 22

commercial mortgage

Answer 22

a bank loan to buy a property where the property is used as collateral

Question 23

share capital

Answer 23

selling shares to an investor

Question 24

revenue

Answer 24

selling price * quantity sold

Question 25

variable costs

Answer 25

costs that vary in direct proportion to output

Question 26

fixed costs

Answer 26

costs that dont vary with output

Question 27

direct costs

Answer 27

costs that arise from the production of a product

Question 28

overheads

Answer 28

overheads that aren't related to the production

Question 29

semi variable costs

Answer 29

a cost that contains both fixed and variable components

Question 30

break even point

Answer 30

the number of units a business has to sell for the revenue and costs to be the same

Question 31

break even formula

Answer 31

fixed cost / (selling price - variable costs per unit)

Question 32

margin of saftey

Answer 32

difference between output level and break even output

Question 33

contribution

Answer 33

selling price - variable cost per unit

Question 34

drawbacks of break even

Answer 34

makes assumptions: - assumes 1 price - no economies of scale - no bulk discounts - 1 product - no pricing strategies