Lesson 1 - Business activity Flashcards
Define need
A need is a good or service essential for living
Define want
A want is a good or service which people would like to have but which is not essential for living.
Define Scarcity
Scarcity is when there are no enough products to satisfy the wants of the population
What are the four factors of production
- Capital
- Enterprise
- Land
- Labour
Define Opportunity Cost
Is the next best alternative given up by choosing another item.
Define Specialisation
Specialisation occurs when People and Businesses focus on what they are best at.
How can a business increase added value.
- Increase selling price but keep the cost of materials the same.
- Reduce the cost of materials but keep the price the same.
Define Division of labour
Division of Labour is when the production process is split into different tasks and each worker performs one of these tasks
List 2 Advantages of Specialisation
- Workers become specialized in 1 task thus increasing efficiency
- Less time is wasted moving from one bench to another.
Define a business
A business combines the four factors of Production to produce goods or services to satisfy the wants of the population.
Define Added Value
Added value is difference between the selling price of the product and the cost of bought in raw materials and components.
Give 2 reasons why Added Value is important.
- Can pay for other costs such as labour costs and management expenses.
- May be able to make profit if Other costs total less than the added value.
List 3 reasons why specialization is very common now
- Specialised machinery is widely available
- Workers realise the increase in living standards
- Increased competition leads to business keeping low costs
List 2 Disadvantages of Specialisation
- Workers may become bored by just doing 1 task.Thus efficiency may fall.
- If one worker is absent, the whole production may stop if no one can do that particular task
