CHAPTER ONE | Business Activity Flashcards
What is a need?
A good or a service that is essential for living.
What is a want?
a good or a service that you would like to have but isn’t essential for living
What are the factors of production?
- Land
- Labor
- Capital
- Enterprise
What is the definition of land?
the natural resources provided by nature
What is the definition of Labor?
The number of people working in a business (employees)
What is the definition of Capital?
It is the machinery used to manufacture goods in a business.
What is the definition of Enterprise?
The owner of a business.
What is scarcity?
It is the lack of sufficient products to fulfill the total wants of the population. (Unlimited wants + limited resources= scarcity)
What is the definition of opportunity cost?
To give up one thing for something more important
What is specialization?
When a business concentrates on what they’re best at
Why is specialization common?
- Specialized machinery and technology are now widely available
- Increasing competition means that businesses have to keep costs low
- Most people recognize that higher living standards can result from being specialized.
What are the advantages and disadvantages of specialization?
Advantages:
1. Workers are trained in one task and specialize in it - this increases output
2. Less time is wasted moving from one workbench to another
Disadvantages:
1. Workers can become bored doing just one job - output might decrease
2. If one worker is absent and no one else can do the job, production might be stopped
What is added value?
It is the difference between the selling price of a product and the cost of bought-in materials and components.
