The Purpose Of A Business

Question 1

What is a business?

Answer 1

Organisation that produces and supplies goods and services

Question 2

Factors of production

Answer 2

Land - all natural resources used in production
Labor - all inputs into production by humans
Capital - man made resources used in production eg buildings machinery
Enterprise - the final factor and refers to the skills of people in creating and managing a business.

Question 3

Why would someone want to be an entrepreneur?

Answer 3

• entrepreneur have an idea, interest or hobby they wanna turn into business
• spotted an opportunity- gap in the market and wanna respond
• like the idea of being own boss, not being answerable to others
• make more money
• fit working lives around other commitments
• may be unhappy with current job

Question 4

Goods, services needs and wants

Answer 4

Goods - a physical product
Service - intangible product - haircut
Want - a person would like to buy
Need - a necessity which person requires

Question 5

Opportunity cost

Answer 5

What is given up as a consequence of a particular choice or decision

Question 6

Social enterprise

Answer 6

A business that is set up to help society rather then make a profit

Question 7

Primary, secondary and tertiary sectors

Answer 7

Primary - first stage of production extracts earths natural resources. Agriculture

Secondary - use raw materials to manufacture goods or construct items - manufacturing

Tertiary - provide services to consumers or other organizations- education

Question 8

Entrepreneur and enterprise

Answer 8

Entrepreneur- someone willing to take a risk involved in starting a new business

Enterprise - another word for a business. Also refers to the skills of people creating and managing a business.

Question 9

Characteristics of an entrepreneur

Answer 9

Willingness to take risk

Hardworking and committed- have a desire to succeed

Innovative - good ideas

Organized - manage business efficiently

Question 10

The dynamic nature of a business

Answer 10

Business space a constantly changing business environment due to

Technological change - new products and methods of production

Economic change - interests rates and exchange rates, inflation, GDP

• legal change - range of laws and regulations - affects production

Environmental expectations- produce goods without damaging environment

Question 11

Reasons for starting a business

Answer 11

• Producing goods
• supplying services
• distributing services
• Distributing products
• Fulfilling a business opportunity
• Providing goods and services which will benefit others