GCSE Business section 1 Flashcards
Define a need
A good or service that is essential for living
Define a want
A good or service which people would like, but is not essential for living
Define scarcity
When the demand for a good or service is greater than the availability of the good or service
Define Opportunity cost
The loss of the next best alternative without making a decision
Define and give advantages/disadvantages of Specialisation
People and businesses concentrate on what they are best at
Advantage-
More efficient
Better quality
Reduces average costs
Disadvantage
More things can go wrong and the consequences are greater if one thing goes wrong, 1 mistake breaks all.
What are the 4 factors of production
Capital- Machines for production
Enterprise- Ideas to setup the business
Land- Natural resources
Labour- Number of people available to work
what is the basic economic problem
There are unlimited wants but limited resources. This leads to scarcity.
What is Business activity
The process of producing goods and services to satisfy consumer demmands.
Define Added Value
The difference between the selling price of a product and the cost of bought in materials and components.
How to add value
Reduce Costs
Increase selling price
Define the Primary sector
the economic sector that involves the extraction of raw materials e.g. farming, mining, fishing, forestry
Define the Secondary sector
The economic sector that contains the role of manufacturing the raw materials e.g. steel workers, jewlers, builders, Food production
Tertiary sector
The economic sector that involves the provision of servicesto companies e.g. Pharmacies, healthcare, entertainment, technology, scientists
Define the Public sector
The part of the economy controlled by the government e.g. healthcare, education
Define the Private sector
The part of the economy not controlled by the government.
Define a mixed economy
An economy containing both private and public businesses
Define an Entrepeneur
Someone who has and idea for a business who takes the financial risk of starting and managing a new business
Characteristics of an entrepeneur
Opportunity spotter- Someone who comes up with a new idea with a USP
Risk taker- Invest their own fincance in an attempt to make a profit
Decision maker- Increases efficiency while lowering costs
Creative thinker- Creates a USP which increases sales
Self Motivator- More productive, Lower costs
Strong Communicator- Makes faster decisions
Define a business plan
A business plan is a detailed written doccument outlining the purpose and aims of a business which is often used to persuade lenders or investors to fincance a business proposal
Different parts of a Business plan
The name
The opportunity- The product, market research
The market- Current size, potential for growth and competitors
The objectives of the business- what the business hopes to achieve
Financial forecasts- a cash flow forecasts and projected sales, revenue and profit for at least the first year.
Benefits of a good business plan
Leads to more investors
Provides important information such as objectives to help monitor progress
Shows investors that you have the ability to pay back loans
How can the government help Start up businesses
They can:
Provide advise
Provide loans/ grants
Lower tax rates
Provide training for the workers
Why do the government support Start-up businesses
Creates jobs
Increases out put of goods and services
How can you measure business size
Capital employed- Value of all long term finance invested in a business
Value of output- amount businesses earn from selling their products
Number of employees
Market share- % of sales made by one firm out of the entire industry sales
