Key words & definitions

Question 1

Mechanisation

Answer 1

machinery is used but labour is still required

Question 2

Automation

Answer 2

machinery is used and a computer controls it

Question 3

Lean production

Answer 3

A Japanese production system which ensures that waste is kept to a minimum

Question 4

Just in time (JIT)

Answer 4

Stocks of materials are not stored and are used immediately

Question 5

job production

Answer 5

Involved producing each product individually

Question 6

Batch production

Answer 6

used when there are set stages that the production needs to go through. One stage has to be finished before the next stage of production can begin

Question 7

Flow production (mass production)

Answer 7

continuous movement of items through production. When one task finishes, the next task starts immediatley

Question 8

Division of labour

Answer 8

organisation of production into a number of specialised , simple repetitive processes

Question 9

specialisation

Answer 9

workers specialise in carrying out simple production tasks

Question 10

Process production

Answer 10

involves a series of automated processes that are applied to a variety of raw materials. Resulting in a large quantity of products

Question 11

added value

Answer 11

increase the worth that a business makes for a product. It’s the difference between what it costs to produce and the price charged to customers

Question 12

Efficiency

Answer 12

achieving maximum productivity with minimum wasted effort or expense

Question 13

Total quality management (TQM)

Answer 13

Process where all workers are responsible for quality throughout the process

Question 14

Opportunity cost

Answer 14

the costs of missing out on something else

Question 15

internal finance

Answer 15

finance comes from within the business

Question 16

External finance

Answer 16

finance comes from outside of the business

Question 17

Variable costs

Answer 17

costs which change when the output of a business changes

Question 18

fixed costs

Answer 18

costs which remain the same- regardless of output

Question 19

total costs

Answer 19

total costs made by the business

Question 20

average costs

Answer 20

cost for each unit that a business sells

Question 21

Revenue (turnover)

Answer 21

money a business receives for selling it’s goods/ services

Question 22

Break even

Answer 22

the point at which the sales are exactly the same as the costs

Question 23

margin of safety

Answer 23

the difference between the actual level of output and the break even output

Question 24

semi- variable cost

Answer 24

a cost which has both fixed and variable qualities

Question 25

cash flow

Answer 25

movement of money in and out of a business account

Question 26

inflows (income)

Answer 26

money received by a business

Question 27

outflows (expenditure)

Answer 27

money paid out of a business

Question 28

Net cash flow

Answer 28

difference between inflows and outflows

Question 29

Positive net cash flow

Answer 29

inflows are greater than outflows

Question 30

Negative net cash flow

Answer 30

inflows are not enough to cover outflows

Question 31

Opening/ closing balance

Answer 31

amount of money in a business account at any particular time

Question 32

cash flow forecast

Answer 32

prediction at the start of the year

Question 33

cash flow statement

Answer 33

what actually happened

Question 34

gross profit

Answer 34

amount of profit made by a business by selling goods or services, without paying any of the day-to-day running of the business

Question 35

net profit

Answer 35

profit made as a result of buying and selling goods; makes an allowance for the costs of running the business

Question 36

accounting

Answer 36

the process of keeping financial records

Question 37

expenses

Answer 37

costs of running a business that occur as part of a company's operated activities during a specific accounting period

Question 38

Profit margins

Answer 38

ratio of profit over revenue; expressed as a percentage. Mainly an indication of the ability of a company to control costs

Question 39

exchange rates

Answer 39

value of currency in terms of another

Question 40

strengthening exchange rates

Answer 40

if the pound increases, the value is said to strengthen. the pound will buy MORE of a foreign currency

Question 41

weakening exchange rates

Answer 41

if the pound is decrease in value, it is said to have weakened. the pound will buy LESS of a foreign currency

Question 42

imports

Answer 42

goods and service bought from other countries; MONEY GOING OUT OF THE UK

Question 43

exports

Answer 43

goods and services which are sold to other countries; payments/ money INTO THE UK

Question 44

Interest rate

Answer 44

cost of borrowing

Question 45

The European Union

Answer 45

a political and economic union of 28 members/ states that are located in Europe

Question 46

Eurozone

Answer 46

group of countries in the EU that share the same currency

Question 47

Single market

Answer 47

Based on the 'four freedoms': free movement of people, goods, services and capital

Question 48

tariffs

Answer 48

A tax paid on IMPORTS

Question 49

Quotas

Answer 49

limit on the total quantity of products that can be supplied to the market

Question 50

Globalisation

Answer 50

the process by which business activities in different countries are becoming more and more connected

Question 51

international trade

Answer 51

companies in one country produce goods and services and sell them in other countries

Question 52

production abroad

Answer 52

firms may decide to set up their own factories and offices abroad

Question 53

exploitation of workers

Answer 53

employees may be paid very low wages and have to work long hours in dangerous conditions

Question 54

pollution

Answer 54

developing countries offer suffer from negative impacts of lots of production

Question 55

Culture

Answer 55

local culture is being affected by global branding

Question 56

inflation

Answer 56

Prices of goods are GENERALLY rising

Question 57

Income tax

Answer 57

tax on a person's income. | Sole traders and partnerships pay income tax

Question 58

national insurance

Answer 58

dedicated to support the NHS and sate partnerships | paid by sole traders and partnerships

Question 59

corporation tax

Answer 59

paid my limited companies

Question 60

business rates

Answer 60

payed by businesses on the property owned

Question 61

council tax

Answer 61

payed by home owners/ tenants on the property they live in

Question 62

VAT (value added tax)

Answer 62

tax on spending; currently charged at 20%. | VAT is on most goods and services that we buy

Question 63

monopoly

Answer 63

a market dominated by one seller | exists when a business has a market share of at least 25%

Question 64

Perfect competition

Answer 64

a market where there are a large number of sellers

Question 65

external costs

Answer 65

negative externalities | costs of a third party

Question 66

private costs

Answer 66

costs to a customer/ business as a result of business production

Question 67

social cost

Answer 67

total external costs | costs to anyone in society

Question 68

ethics

Answer 68

what is considered morally right and morally wrong

Question 69

purchasing economies of scale

Answer 69

a business is given a discount for buying in large quantaties

Question 70

economies of scale

Answer 70

unit costs fall as output increases

Question 71

financial economies of scale

Answer 71

as a firm gets bigger, it will gain more assets | Bigger firms are more likely to get cheaper loans (low interest rates) as they have more security to offer the bank

Question 72

managerial economies of scale

Answer 72

large businesses can afford to employ specialist managers who will increase efficiency

Question 73

Marketing economies of scale

Answer 73

larger firms can benefit from being able to use more effective methods of marketing, which reach more people

Question 74

technical economies of scale

Answer 74

as a firm gets bigger, it can use better methods and equipment

Question 75

risk bearing economies of scale

Answer 75

large firms can spread risk by diversifying into different products or taking over supplies

Question 76

Dis-economies of scale

Answer 76

unit costs do not always fall as the scale of production is increased. if they rise, a firm is said to experience dis- economies of scale. This usually occurs because the firm becomes too big to be managed efficiently.