section 1 Flashcards
economic problem
There are unlimited wants but limited resources to produce the goods and services to satisfy wants. This creates scarcity.
Factors of production
Resources needed to produce goods and services. There are 4 factors of production (land, labour, capital, enterprise) and they are limited in supply.
Scarcity
The lack of sufficient products to fulfil the total wants of the population.
Opportunity Cost
The next best alternative given up by choosing another item.
Specialisation
When people and businesses concentrate on what they are best at.
Division of labour
When the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.
Stakeholder
A person or group with a direct interest in the performance and activities of a business.
Social Enterprise
Has social objectives as well as an aim to make profit to reinvest back into the business.
Franchise
Business based upon the use of brand names and trading methods of an existing successful business. Franchisees use franchisor’s ideas, names.
Shareholders
Owners of a limited company. They buy shares which represent part ownership of a company.
Unlimited Liability
The owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they make.
Limited Liability
The liability of shareholders in a company is only limited to the amount they invested.
Vertical Integration
When one company merges with or takes over another in the same industry but at a different stage of production.
Horizontal Integration
When one company merges with or takes over another in the same industry in the same stage of production.
Takeover/Acquisition
One business buys out the owners of another business which then becomes part of the ‘predator’ business
