Lesson 1 - Business activity

Question 1

Define need

Answer 1

A need is a good or service essential for living

Question 2

Define want

Answer 2

A want is a good or service which people would like to have but which is not essential for living.

Question 3

Define Scarcity

Answer 3

Scarcity is when there are no enough products to satisfy the wants of the population

Question 4

What are the four factors of production

Answer 4

1. Capital
2. Enterprise
3. Land
4. Labour

Question 5

Define Opportunity Cost

Answer 5

Is the next best alternative given up by choosing another item.

Question 6

Define Specialisation

Answer 6

Specialisation occurs when People and Businesses focus on what they are best at.

Question 7

How can a business increase added value.

Answer 7

1. Increase selling price but keep the cost of materials the same.
2. Reduce the cost of materials but keep the price the same.

Question 8

Define Division of labour

Answer 8

Division of Labour is when the production process is split into different tasks and each worker performs one of these tasks

Question 9

List 2 Advantages of Specialisation

Answer 9

1. Workers become specialized in 1 task thus increasing efficiency
2. Less time is wasted moving from one bench to another.

Question 10

Define a business

Answer 10

A business combines the four factors of Production to produce goods or services to satisfy the wants of the population.

Question 11

Define Added Value

Answer 11

Added value is difference between the selling price of the product and the cost of bought in raw materials and components.

Question 12

Give 2 reasons why Added Value is important.

Answer 12

1. Can pay for other costs such as labour costs and management expenses.
2. May be able to make profit if Other costs total less than the added value.

Question 13

List 3 reasons why specialization is very common now

Answer 13

1. Specialised machinery is widely available
2. Workers realise the increase in living standards
3. Increased competition leads to business keeping low costs

Question 14

List 2 Disadvantages of Specialisation

Answer 14

1. Workers may become bored by just doing 1 task.Thus efficiency may fall.
2. If one worker is absent, the whole production may stop if no one can do that particular task