Unit 1

Question 1

what are the characteristics of an entrepreneur?

Answer 1

-risk taker
-innovative
-initiative
-confident

Question 2

what is enterprise

Answer 2

another word for business

Question 3

positive effects of entrepreneurial activity

Answer 3

-more employment opportunities
-less unemployment
-lower prices
-increased rates of economic growth

Question 4

negative effect of entrepreneurial activity

Answer 4

-leads to redundancies
-higher prices

Question 5

How would an entrepreneur assess risk?

Answer 5

-can they afford to fail financially
-viability of business plan (optimistic or realistic)
-appreciate sacrifices (time consuming, strained relationships and declined mental wellbeing)

Question 6

the 4 factors of production

Answer 6

-land
-labour
-enterprise
-capital

Question 7

land =

Answer 7

natural resources (wood,coal,oil)
do NOT call these raw materials

Question 8

labour =

Answer 8

employees need to be educated and skilled

Question 9

capital =

Answer 9

Money AND assets. E.g machinery.
Leads to efficiency and productivity

Question 10

4 factors of the decision making process

Answer 10

risks
rewards
uncertainty
opportunity cost

Question 11

economic uncertainty

Answer 11

competition
changing production process
interest

Question 12

opportunity cost

Answer 12

the cost of the next best alternative forgone. (missing out on a good opportunity)

Question 13

added value

Answer 13

equivalent to the increase in value that a business creates by undertaking the production process

Question 14

adding value

Answer 14

The difference between the price of the finished product and the cost of the inputs involved in making it.
cost of final product - cost of input

Question 15

What is a stakeholder?

Answer 15

any individual or organisations who have an interest in the activities and decision making of a business

Question 16

what are shareholders’ best interests for the business

Answer 16

growth
profit
dividends

Question 17

what are the employees’ best interests for the business?

Answer 17

salary
safe working conditions
bonuses
promotion opportunity
job security

Question 18

what are the customers’ best interests for the business?

Answer 18

good quality goods and services
value for money

Question 19

what is the private sector?

Answer 19

-privately owned e.g LTD or PLC
-they’re generally run to make a profit
-act ethically
-good customer service

Question 20

what is the public sector?

Answer 20

-owned by the community
-profit put back into the company

Question 21

what is the social goals sector (third sector)?

Answer 21

-voulantary / charitable work
- e.g oxfam

Question 22

unicorporated means

Answer 22

unlimited liability

Question 23

incorporated means

Answer 23

limited liability

Question 24

what types of business are unincorporated in the private sector?

Answer 24

-sole trader
-partnership

Question 25

what types of business are incorporated in the private sector?

Answer 25

• Private limited company
• Public limited company