Topic 1.6 Business Planning.

Question 1

Define a “business plan”

Answer 1

A document setting out what a business does and what it hopes to achieve in the future.

Question 2

Define “business planning”

Answer 2

Is the process of producing a business plan.

Question 3

Define “uncertainty”

Answer 3

Uncertainty is when there is a lack of information about a situation. This means the outcome or consequences are very difficult to predict.

Question 4

Define a “risk”

Answer 4

The possibility of something going wrong.

Question 5

Define “revenue”

Answer 5

The income that a firm receives from selling its goods or services. It is also referred to as ‘turnover’ it is measured by the numbef of units sold multiplied by the price.

Question 6

Define ‘Total costs”

Answer 6

Total costs are fixed costs plus variable costs.

Question 7

Define “fixed costs”

Answer 7

Costs that do not change when a business changes its output.

Question 8

Define “variable costs”

Answer 8

Costs that vary directly with the business’s level of output.