Understanding business activity Flashcards
Business activity
Definition of a business
A business is an organisation that combines the factor of production to goods/services to satisfy customer’s needs and wants in order to make profit.
Explain what is a need?
Needs are the basic requirements of humans beings that had to be fulfilled in order to live/survive.
Explain what is a want?
Want are thing which people consume a part of their desires/beyond their necessities
List the factors of production
(i)Land
(ii)Labour
(iii)Capital
(iv)Enterprise
Explain the economic problem
The economic problem result from unlimited wants and limited resources.
Explain how do we calculate scarcity?
Unlimited wants+limited resources=scarcity
Explain opportunity cost
Opportunity cost is the next best alternative by choosing another items
Explain scarcity
Scarcity happened where there is limited resources and services to satisfy people want provide by the government.
Explain specialisation
Specialisation can be defined as the separation of work process into a number of task which each task is performed by a separate group of people.
Advantage of specialisation
(i)Time is saved
(ii)Less error
(iii)Production and efficiency increased
Disadvantage of specialisation
(i)Boredom
(i)Repetition of work-routine life for workers
-reduce motivation
-lead to more errors
-affect quantity of product
Explain adden value
Adden value is the difference between a particular product’s selling price and cost of raw material/components used in making particular product
Ways of adding value
(i)Increase the selling price of product but the cost of components stay the same.
(ii)Reduce cost of components,keep selling price the same
Explain how we could increase adden value?
(i)Create a brand
(ii)Good packing
(iii)Find cheaper suppliers
