Section 1: Understanding Business Activity Flashcards
Business Activity
The process of producing goods and services to satisfy consumer demand.
Need
A good or service which is essential to living
Want
A good or service which people would like but is not essential for living.
Economic Problem
Unlimited wants cannot be met because there are limited factors of production. This creates Scarcity.
Factors of Production
The reasources needed to produce goods and service - land, labour, capital and enterprise.
Land
ALl natural reasources such as minerals, ores, fields, oil and forests.
Labour
The number of people available to work.
Capital
Machinery equipment and finance needed for production of goods and services.
Enterprise
People prepared to take the risk of setting up businesses they are known as enterpreneurs.
Scarcity
There are not enough goods or services to meet the wants of the population.
opportunity cost
the benefit that could have been gained from an alternative use of the same reasource
Specalisation
people and busniess concentrate on what they are best at
Division of Labour
Production is divided into seperate tasks and each employee does just one of those tasks.
Consumer goods
Products which are sold to the final consumer. They can be seen and touched for example computers and food.
Consumer Services
Non-tangible products such as insurance services, transport.
