understanding the nature and purpose of business

Question 1

define corporate aims

Answer 1

the long term intentions of the business or what it is trying to achieve

Question 2

a corporate objective is…

Answer 2

the targets which must be achieved if a firm is to meet its stated aims. they must be SMART

Question 3

what are fixed costs?

Answer 3

the costs that do not change with the amount the firm produces e.g. mortgage payments

Question 4

define variable costs

Answer 4

the costs that change as output changes. they change in direction to proportion e.g raw materials cost will increase by 10% if output increases by 10%

Question 5

what are total costs?

Answer 5

all costs, both fixed and variable costs, of producing a specific number of goods

Question 6

unit costs are…

Answer 6

the cost of producing 1 unit or 1 item

Question 7

what’s revenue?

Answer 7

the amount of income a firm receives from producing and selling a specific number of goods

Question 8

what’s profit?

Answer 8

profit is made when a firms revenue is greater than its total costs

Question 9

define loss

Answer 9

loss is made when a firms revenue is less than its total costs

Question 10

what’s a mission statement?

Answer 10

this attempts to set out the purpose of an organisation or why it exists

Question 11

what are the 4 factors of production?

Answer 11

land
labour
capital
enterprise

Question 12

define enterprise

Answer 12

the bringing together of the other factors of production to produce the goods and services