Enterprise Flashcards
What is enterprise?
It refers to the actions of a risk taker who starts up his or her own business
What is an entrepreneur?
A risk taker who sets up a business
What are the characteristics of entrepreneurs?
- Self belief and confidence
- Persistance and drive
- Ability to work under pressure
- Creativity and imagination
- Energy and enthusiasm
- Leadership skills
- Being comfortable with risk
What factors make up the factors of production?
Captial
Enterprise
Land
Labour
What are FOPs?
The inputs that are used in the production of goods and services
What is value added?
What a business achives by ensuring that the price of the finished good or service is in excess of the cost of inputs
What are the advantages of enterprise for the economy?
- Creates jobs
- Corporate tax/income tax
- Competition - more choice, efficiency
- Higher quality
- Gov spending on public services
- Innovation
- Charity
What are the disadvantages of enterprise for the economy?
- Many fail - job losses
- Wasted materials/stock
- Risk - potentially bankrupsy
- Use of natural resources = pollution
- Uncompetitive practise
- Gov having to bail out business
What will happen if there is a shortage of a particular factor of production?
The factor’s price will rise which will reduce profit margins
How might a firm respond to a shortage of a factor of production?
They may raise the price of their good or service or they may try and lower their costs
What is one of the key decisions that an entrepreneur has to make in terms of factors of production?
Which factors to use and in what quantities which depends on the cost
What are the constaints on a business that an entrepreneur has to deal with?
The environment, competition, legislation and the economy
