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Economic problem
There exit unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity.
Factors of production
Resources needed to produce goods or services. There are four factors of production and they are limited in supply.
Scarcity
The lack of sufficient products to fulfil the total wants of the population.
Type of factors of production
Land, Labour, Capital and enterprise.
Division of labour
This is when the production process is spit into different tasks and each worker preforms one of these tasks. It is a form of specialisation.
Businesses
Combined factors of production to make products, goods and services which satisfy peoples wants.
Advantages of division of labour
Quicker and cheaper to train workers as fewer skills need to be taught. Workers are trained in one task and specialize in this.
Disadvantages of dol
Workers can become bored. If the worker is absent no one else can do the job, meaning production might be stopped.
Added value
The difference between the selling price of a product and the cost bought in materials and components.
primary sector
Firms whose business activity involves the extraction of natural resources. Mining and agriculture
Secondary sector
Firms that process and manufacture goods from natural resources like food caning, clothing production and car manufacturing.
Tertiary sector
Firms that provide services to consumers and other sectors of the industry.
De- industrialisation
Occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
Mixed economy
A mixed economy has both a private sector and a public state sector.
Why do governments support business start ups
To reduce unemployment, to increase competition.
capital employed
The total value of capital used in the business.
Methods of measuring business size
Number of people employed, Value of output, value of sales and value of capital employed.
Sole trader
A business that is owned by one person.
Partnership agreement
The written and legal agreement between business partners. It is not essential for partners to have such an agreement but it is always recommended.
Annual general meeting
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.
Business objectives
Aims or targets that a business works towards.
Calculation fpr market share
Company sales divided by total market sales times a hundred.
wage
A payment for work, usually paid weekly.
Time rate
The amount paid to an employee for one hour of work.
Piece rate
The amount paid per unit of output.
Salary
Is payment for work, usually paid monthly
Bonus
An additional amount of payment above basic pay as reward for good work.
Comission
Payment relating to the number of sales made.
Profit sharing
A system whereby a proportion of the companys profits is paid out of employees.
Organisation structure
Refers to the levels of management and division of responsibilities within an organisation.
Organisational chart
Refers to a diagram that outlines the internal management structure.
Hierarchy
Refers to the levels of management in any organisation, from the highest to the lowest.
Level of hierarchy
Refers to managers,supervisors other employees who are given similar levels of responsibility in an organisation.
Closed shop
This is when all employees must be a member of the same trade union.
Workforce planning
Establishing the workforce needed by the business for the foreseeable future in terms of number and skills of employees required.
Dismissal
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