unit 1 key terms

Question 1

business activity

Answer 1

the process of producing goods and services to satisfy consumer demand

Question 2

need

Answer 2

a good or service which is essential to living

Question 3

want

Answer 3

a good or service which people would like, but not essential for living

Question 4

economic problem

Answer 4

unlimited wants cannot be met because there are limited factors of production. this creates scarcity

Question 5

factors of production

Answer 5

the resources needed to produce goods or services- land, labour, capital and enterprise

Question 6

scarcity

Answer 6

there are not enough goods and services to meet the wants of population

Question 7

opportunity cost

Answer 7

the benefit that could have been gained from alternative use of the same recourse

Question 8

specialisation

Answer 8

people and businesses concentrate on what they are best at

Question 9

division of labour

Answer 9

production is divided into separate tasks and each employee does just one of those tasks

Question 10

consumer goods

Answer 10

products which are sold to the final consumer. they can be seen and touched, for example computers and foods

Question 11

consumer services

Answer 11

non-tangible products such as insurance services, transport

Question 12

capital goods

Answer 12

physical goods, such as machinery and delivery vehicles, used by other businesses to help produce other goods or services

Question 13

land

Answer 13

all natural resources such as minerals, ores, fields, oil and forests

Question 14

labour

Answer 14

the number of people available to work

Question 15

capital

Answer 15

machinery equipment and finance needed for production of goods and services

Question 16

Enterprise

Answer 16

people prepared to take risks of setting up businesses- they are known as entrepreneurs

Question 17

added value

Answer 17

an improvement or addition to something that makes it worth more

Question 18

convenience

Answer 18

many consumers lead busy lives and they are often prepared to pay a higher price for goods and services which they can have immediately or which save them time, for example ready meals

Question 19

start up capital

Answer 19

finance needed when first starting up a business

Question 20

partnership

Answer 20

a business formed by two or more people who will usually share responsibility for the day to day running of the business partners usually invest capital in the business and will share profit