IGCSE Business Studies 1.1 Business Activity section

Question 1

A need

Answer 1

A need is a good or service essential for living

Question 2

A want

Answer 2

A want is a good or service which people would like to have but which is not essential for living. People’s wants are unlimited.

Question 3

Factors of production

Answer 3

are those resources needed to produce goods and services. There are four factors of production, and they are in limited supply - land, labour, capital and enterprise

Question 4

Opportunity cost

Answer 4

Opportunity cost is the next best alternative given up by choosing another item

Question 5

Specialization

Answer 5

occurs when people and businesses concentrate on what they are best at

Question 6

Economic Problem

Answer 6

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity

Question 7

Scarcity

Answer 7

Scarcity is the lack of sufficient products to fulfil the total wants of the population.

Question 8

Goods and Services

Answer 8

Primary purpose of the business activity to satisfy a need or demand in the market

Question 8

Division of labour

Answer 8

is when the production process is split up into different tasks and each worker performs one of those tasks. It is a form of specialization

Question 9

Added value

Answer 9

Is the difference between the price that is charged to the customer and the cost of the inputs required to create the product or service

Question 10

Adding value

Answer 10

Is the process of taking raw materials and using them in such a way that the end product created is worth more then the cost of the raw materials used to create it.