unit 1 key terms Flashcards
business activity
the process of producing goods and services to satisfy consumer demand
need
a good or service which is essential to living
want
a good or service which people would like, but not essential for living
economic problem
unlimited wants cannot be met because there are limited factors of production. this creates scarcity
factors of production
the resources needed to produce goods or services- land, labour, capital and enterprise
scarcity
there are not enough goods and services to meet the wants of population
opportunity cost
the benefit that could have been gained from alternative use of the same recourse
specialisation
people and businesses concentrate on what they are best at
division of labour
production is divided into separate tasks and each employee does just one of those tasks
consumer goods
products which are sold to the final consumer. they can be seen and touched, for example computers and foods
consumer services
non-tangible products such as insurance services, transport
capital goods
physical goods, such as machinery and delivery vehicles, used by other businesses to help produce other goods or services
land
all natural resources such as minerals, ores, fields, oil and forests
labour
the number of people available to work
capital
machinery equipment and finance needed for production of goods and services
Enterprise
people prepared to take risks of setting up businesses- they are known as entrepreneurs
added value
an improvement or addition to something that makes it worth more
convenience
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
start up capital
finance needed when first starting up a business
partnership
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
