Unit 1・Chapter 1 Scarcity, choice and opportunity cost Flashcards
Needs
Goods or services that are essential for living
e.g. water, food, clothes…etc
Wants
Non-essential goods and services that improve quality of life.
e.g. luxury items, and PS5 games..etc
Scarcity
The limited availability of resources relative to the unlimited wants of people.
Opportunity Cost
The next best alternative forgone when making a choice (give up something)
Specialization
When individuals, businesses, or nations focus on producing a narrow range of goods or services.
e.g. Macdonald’s a worldwide market so it’s not a specialization.
But most people don’t know Flowerknows (China cosmetic), which Flowerknows considers to be a specialization/narrow range or small market
1.1: Business Activity
The process of combining resources to produce goods and services to satisfy human needs and wants.
1.1: Added value
The differences in the selling price of a product and the cost of the raw materials used to produce it.
For example:
10$ milk+ 10$ wheat+ 10$ egg+ 10$ sugar= 40$ cake
1.2: Primary Sector
Industries involved in the extraction of natural resources, such as farming, fishing, or mining
1.2: Secondary Sector
Industries involved in manufacturing and construction, such as factories producing cars or furniture.
1.2: Tertiary Sector
Industries provide services to consumers and businesses, such as retail, banking, and healthcare.
1.2: Public Sector
The part of the economy is controlled bythe government, such as schools or hospitals.
Private Sector
The part of the economy operated by private individuals or companies
Mixed Economy
An economy where both private and public sectors operates side by side.
De-industrialisation
The decline in the importance of the secondary sector in a country’s economy, often due to growth in the tertiary sector.
Entrepreneurship
The process of identifying business opportunities, taking risks, and organizing resources to start and run a business.
Business plan
A document outlining a business’s objectives, strategies, market, and financial forecasts to guide and attract investors.
Grants
Financial support provided by governments to businesses, often to encourage start-ups or support growth,
Methods of Measuring Business Size
- Number of employees: The total workforce
- Value of output: The total monetary value of goods / services prouded
- Capital Employed: The total value of financial resources used in the business.
