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Business > Unit 1 Understanding Business activity > Flashcards

Unit 1 Understanding Business activity Flashcards

1
Q

What is a need product?

A

A good of or service essential for living

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2
Q

What is a want product?

A

A good or service which people would like to have but which is not essential for living.

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3
Q

What is the economical problem?

A

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity

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4
Q

Factoes of production

A

Resources needed to produce goods and services. THere are four factors (Land, Labour, Capital, Enterprise) of production and they are in limited supply

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5
Q

What is scarcity?

A

the lack of sufficient products to fulfil the total wants of the population

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6
Q

What is opportunity cost?

A

the next best alternative given up by choosing another item

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7
Q

What is specialisation?

A

Wheb people and businesses concentrate on what they are best at

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8
Q

What is division of labour?

A

WHen the production process is split into different tasks and each worker preforms one of these tasks. It is a form of specialisation

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9
Q

What are businesses?

A

Cobine factors of production to make products which satisfy people’s wants

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10
Q

What is added value?

A

The difference between the selling price of a product and the cost of bought in materials and components

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11
Q

What is the primary sector?

A

Is a sector of industry which extracts and utilises the natural resources of the earth to produce raw materials used by other businesses

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12
Q

What is the secondary sector?

A

A sector of industry which manufactures goods using the raw materials extracted by the primary sector

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13
Q

What is De-Industrilisation?

A

When there is a decline in the importance of the secondary, manufacturing sector of industry in a country.

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14
Q

What is a mixed economy?

A

A mixed economy has both a private sector and a public sector

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15
Q

What is the private sector?

A

Businesses not owned by the government. These businesses can make their own decisions about what to sell and for how much.

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16
Q

What is the public sector?

A

Businesses owned by the government/or state. The government makes the decisions about what to sell and for how much. Sometimes the goods and services are free and paid for by tax (e.g healthcare, education etc)

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17
Q

What is capital?

A

The mone invested into a busines by the pwners

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18
Q

What is an Entrepreneur?

A

A person who organises, operates and takes the risk for a new business venture

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19
Q

What is a business plan?

A

A document containing the buisness objectives and important details about the operations, finance and owners of the new business

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20
Q

What is capital employed?

A

the total value of capital used in the business

21
Q

What is internal growth?

A

Occurs when a business expands its exitsting operations

22
Q

What is external growth?

A

When a business takes over or merges with another business it is often called intergration

23
Q

What is a merger?

A

When the owners of the two businesses agree to join their firms together to make one business

24
Q

WHat is a takeover or aquisition?

A

When on ebusiness buys out the owners of another business wich then becomes part of the “predator” business

25
Q

What is horizontal intergration?

A

When one firm merges with or takes over another one in the same industry at the same stage of production

26
Q

What is Vertical intergration?

A

When on firm merges with or takes over another on in the same industry but not the same stage of production. Vertical intergation can be forward or backward

27
Q

What is Conglomaerate intergration?

A

When one firm merges with or takes over a firm in a completely different industry. This also known as diversication

28
Q

What is a sole trader?

A

A buisness owned by one person

29
Q

What is limited liability?

A

When the liability of the shareholders in a company is limited to the amount they invested.

30
Q

What is unlimited liability?

A

When the owner is responsible for the debt of their business. Ther liability is not limited to the investment te made in the business

31
Q

What is a partnership?

A

Is a form of business in which two or more people agree to jointly own a business

32
Q

What is a partnership agreement?

A

The written and legal agreement between business partners. It is not essential for partners to have such an agreement but it is always reccomended

33
Q

What is an unincorporated business

A

One that does not seperate legal identity. Sole traders and partnership are unincorperated buisness

34
Q

What is an incorporated business?

A

It is a compan that have seperate legal status from their owners

35
Q

What are shareholders?

A

The owners of a limited company. They buy shares which represent part ownership of a company.

36
Q

What is a private limited company?

A

A company that doesn’t float on the stock exchange. Stocks are privately given

37
Q

What is a public limited company?

A

A company that floats on the stock exchange. Anyone can own it.

38
Q

What is an AGM?

A

An anual general meeting is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of directors for the coming year.

39
Q

What are dividends?

A

Payment made to shareholders from the profits of a company. They are the return to shareholders for investing in the company.

40
Q

What is a franchise?

A

A buisness based upon the use of the brand names, promotional logos and trading methods of an existing business. The franchise buys the licenceto operate this business from the fanchisor

41
Q

What are Business objectives?

A

The aims or targets that business works towards

42
Q

What is profit?

A

The total income of a buisness less total costs

43
Q

What is a market share?

A

The proportion of total market sales achieved by one business

44
Q

What is a soical enterprise?

A

Objectives as well as an aim to make a profit to reinvest back into the business

45
Q

What is a stakeholder?

A

Any person with a direct interest in the preformance and activities of a business

46
Q

What are the four factors of production?

A

Land, Labour, Capital, Enterpirse

47
Q

What are the advantages and disadvantages of division of labour

A

Advantages - Increases effciency
Disadvantages - Workers might get bored (may decrease effciency), Production may be stopped

48
Q

What happens when added value is not used?

A

Other costs can’t be paid for
No profit will be made

Business (4 decks)

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