key terms and theories

Question 1

price elasticity of demand

Answer 1

% change in quantity demanded/ % change in price
-less than 1 = inelastic ( not price sensitive - demand falls slowly when price increases)

• equal to 1 = unitary ( demand changes at same time as price)

Question 2

income elasticity of demand

Answer 2

% change in quantity demanded/ % change in income
- less than 1 = inelastic
- more than 1 = elastic
- equal to 1 = unitary

Question 3

outsourcing

Question 4

market growth

Question 5

market share

Question 6

mayo

Question 7

maslows hierachy of needs

Question 8

taylors scientific management

Question 9

herzbergs 2 factor theory

Question 10

mission

Answer 10

the overall aim of a company & the reason for its existence

Question 11

objective

Answer 11

a specific aim for a company’s department or function that helps complete its overall mission and provides a direction for its workers

Question 12

interest rate

Answer 12

the costs of borrowing and reward for lending
- represented as a percentage

Question 13

fixed costs

Answer 13

costs that do not vary with output e.g. utility bills, rent, salary

Question 14

variable costs

Answer 14

costs that vary with output e.g. raw materials, wages, packaging etc

Question 15

incorporated x unincorporated

Answer 15

incorporated = business has a separate legal identity to its owners - companies

unincorporated = no difference between business and its owners - not a company

Question 16

lack of continuity

Answer 16

business is not able to communicate effectively with their stakeholders during an emergency

Question 17

company

Answer 17

separate legal entity - business is separate from its owners
- higher legal obligations