The nature and purpose of business notes Flashcards
What is a product?
A product is a more general term which includes goods and services
Why are business important for a country?
They provide wealth
employment
New products
What are three types of businesses? Give an example of each
Business to Business- Tata
Customer to Customer- eBay
Business to customer- Sony
Why do businesses set objectives?
To give the business something to work towards.
To make the step towards the aims feel more achievable
To analyse the steps to check on the business. .
Semi variable costs
Costs that have both fixed and variable costs for it. For example transport has a fixed cost as rent for vehicle but petrol is variable
How do you work out average costs?
Total cost divided by level of production
What is the formula for revenue?
price x quantity
What is a profit margin?
The percentage of the price which is profit.
What is the formula for working out profit margin
Quantity/ volume of sales
Why are profits important?
They make the business look more attractive to customer. They look good to financial investors
Give 3 examples of benefits from profits for the business
Investors will be attracted as they see the success
Richer companies would make the cost of the business higher
profit allows the business to expand or other forms of growth
