The Nature of Business , Bartering, Money, Instruments of Exchange Flashcards
Define ‘Goods’
Goods may be defined as physical products; tangible commodities.
Define ‘Services’
Services may be defined as a product we experience; intangible commodities.
What determines the nature of
a business?
The nature of
a business is the type of
sector or industry to which
it belongs.
Define ‘Needs’.
Needs may be defined as goods or services that are necessary for survival.
Define ‘Wants’
Wants may be defined as goods and services that one desires but are not necessary to one’s survival.
Define production
Production involves using natural resources, human efforts, tools, and other resources to make goods and services to satisfy needs and wants,
Define Subsistence production
Subsistence production is when an individual or family produces enough to only meet the needs of themselves and their families.
What is the earliest form of trade?
Bartering
How did the barter system work?
It involved trading one good or service for another of equal value., WITHOUT THE USE OF MONEY.
Give four advantages of the barter system
E.I.A.P
It encouraged specialization in production and better use of available resources.
it increased the total volume and variety of goods and services available for trade.
It allowed for greater variety in diet, as early as families could exchange different food items with each other.
It provides a means to avoid losing any surplus produced.
Give four disadvantages of the barter system
The need for a double coincidence of wants
Difficulty establishing an agreed rate of exchange
Indivisibilty of Goods
Inability to store Wealth.
– some items gained
or lost value as time
passed. Example
Gold gained value
Dasheen lost value
What does indivisibility of goods mean?
When the item can not be divided for equal exchange. E.g. A live cow may be worth more than 50lbs of potatoes but it can’t be divided.
What is a double coincidence of wants?
Finding buyers who not only wanted what was being sold but who also could supply the items they wanted in exchange.
Simply put, each person must have what the
other wants and be willing to
exchange.
What is an industry?
An industry is a classification that refers to
a group of companies thatare related in terms of
their primary business activities.
What is a sector?
Sectors are larger
segments of the economy
that can include various
industries.
What is specialisation?
Specialisation is a form of
dividing labour (work, tasks)
where each individual
concentrates their productive
efforts on a single or limited
amount of activities. Also called division of labour.
Specialsation Benefits
Improved Production,
Skills gained, product quality.
Lowered production costs,
worker training time
I.S.P.L.W
Specialisation challenges/disadvantages
Could become boring.
Will become ‘one-skilled’
only
Implications of specialisation
If people create what they are
good at, then they create a lot
of it, and produce it very well.
Then when they specialize,
they can trade the surplus.
This way, they can enjoy high
quality goods and have a higher
standard of living.
What is the role of money?
Money is a commodity that
everyone accepts as a medium of exchange
for all goods and services.
What are the features and characteristics of money?
portable, homogenous, relatively
scarce, acceptable, divisible, durable
What does the mnemonic acronym (PHRSADD) PennyHasRed SocksAndDenimDress stand for?
portable, homogenous, relatively
scarce, acceptable, divisible, durable
Why should money be relatively scarce?
In order to maintain its value
In relation to money explain the term Portable?
able to carry easily
