Key Terms 1.1

Question 1

define goods

Answer 1

products that can be grown or manufactured

Question 2

define services

Answer 2

doing work for people other than by producing goods

Question 3

define risk

Answer 3

making decisions where unknown factors or chances of failure loom large in the decision maker’s mind

Question 4

define calculated risk

Answer 4

taking a chance of exposure to loss or injury after having carefully assed the advantages and disadvantages

Question 5

define business failure

Answer 5

the collapse of a business, probably leading to failure

Question 6

define independence

Answer 6

the need of many business owners to make their own decisions, to be their own boss

Question 7

define financial security

Answer 7

having a stable and strong financial position, ensuring the ability to meet financial obligations and handle unexpected challenges

Question 8

define risk and reward

Answer 8

a balance between the worst that can happen and the best that can happen

Question 9

define competition

Answer 9

companies operating in your marker or market sector

Question 10

define limited liability

Answer 10

restricting the losses suffered by owners to the sum they invested in the business

Question 11

define unlimited liabilty

Answer 11

treating the business and the individual owner as inseparable, so the individual is responsible for all debts of a failed business

Question 12

define profit

Answer 12

the difference between revenue and total costs, if the figure is negative then the business is making a loss

Question 13

define wealth

Answer 13

refers to the accumulation of valuable assets, resources and financial holding that contribute to the long-term financial prosperity and abundance

Question 14

define customer needs

Answer 14

the products or services people have to have to make life comfortable

Question 15

define customer wants

Answer 15

what people choose to spend their money on once the weekly bills have been paid

Question 16

define entrepreneur

Answer 16

business people who see opportunities and are willing to take risks in making them happen

Question 17

define market gap

Answer 17

an area on the market map where few or no existing businesses operate implying a business opportunities to fill an unmet customer need

Question 18

define overtrading

Answer 18

when a business expands its operations too rapidly without having sufficient financial resources or generating enough profits

Question 19

define cash flow

Answer 19

the movement of money into and out of a firm’s bank account

Question 20

define debt

Answer 20

money borrowed by a company from an external source that cant be repayed back