Nature of Business Activity Vocabulary

Vocabulary practice flashcards covering fundamental concepts in business activity, factors of production, added value, opportunity cost, and exam command words.

Business activity

The process of producing goods or services to satisfy human wants and needs, usually in order to make a profit.

Land

All natural resources used in production, including fields, forests, minerals, sea, and raw materials.

Labour

The human effort (both physical and mental) used to produce goods and services.

Capital

Man-made resources used in production, such as machinery, tools, factories, and computers, excluding money itself.

Enterprise

The ability to combine the other three factors of production and take on financial risk to create a business.

Added value

The difference between the selling price of a product and the cost of the inputs used to produce it, calculated as: $\text{Added value} = \text{Selling price} - \text{Cost of inputs}$.

Opportunity cost

The value of the next best alternative forgone when a choice is made.

Goods

Tangible, physical items produced by businesses to satisfy wants and needs.

Services

Intangible activities produced by businesses to satisfy wants and needs.

Needs

Basic requirements necessary for human survival, such as food and water.

Wants

Human desires for items or services that are not essential for survival.

Scarcity

The economic problem where unlimited human desires outpace limited available resources.

Branding

A method of adding value by creating a strong image or identity that boosts perceived value and allows businesses to charge higher prices.

Unique Selling Point (USP)

A distinctive feature or ethical value that sets a product apart from rivals, giving customers a reason to choose it over alternatives.

Convenience

A way to add value by making a product easier to consume or use, such as cutting up raw fruit before selling it.

Identify

An exam command word requiring the student to name or select an item briefly using a word or short phrase without explanation.

Explain

An exam command word requiring cause-and-effect reasoning using the structure: Point $\rightarrow$ Because/Therefore $\rightarrow$ Effect.

Justify

An exam command word requiring a reasoned choice or recommendation supported by contextual evidence.