Unit 1: Chapter 1

Question 1

What is a business?

Answer 1

a business combines the factors of production to make goods and services that satisfy peoples infinite needs and wants

Question 2

What is a need?

Answer 2

a good or service that is essential for survival

Question 3

What is a want?

Answer 3

a good or service which is for enjoyment

Question 4

What are the factors of production?

Answer 4

land, labour, capital, entrepreneur

Question 5

What is the economic problem?

Answer 5

consumers have unlimited wants but there are limited resources. this creates scarcity. businesses then have to choose the opportunity cost

Question 6

What is scarcity?

Answer 6

the lack of sufficient products to meet the wants of the population

Question 7

What is specialisation?

Answer 7

when employees in the business focus on what they are best at, and the production process is split up into different tasks. (division of labour)

Question 8

What are the pros and cons of specialisation?

Answer 8

increases efficiency and productivity

boring and if one person is gone the whole production process stops

Question 9

What is added value?

Answer 9

the difference between the cost it takes to make the product and the selling price

Question 10

How can you increase added value?

Answer 10

increase the selling price or reduce the cost of materials