1.1 the purpose and nature of business

Good

A physical product such as a car.

Service

An intangible product (i.e., one that cannot be touched) such as a haircut or financial advice.

Product

A general term for goods and services.

Consumer

Someone who uses a product.

Customer

Someone who buys a product.

Want

What a person would like to be able to buy.

Entrepreneur

Someone who is willing to take the risks involved in starting a business.

Profit

Measures the difference between the value of a business’s revenue (from sales) and its total costs.

Social enterprise

A business that is set up to help society rather than to make a profit.

Gap in the market

When a group of consumers have a need for a new product that is not being supplied by existing businesses.

Factors of production

The inputs (land, labour, capital, and enterprise) that are used to provide goods and services.

Enterprise

Another word for a business; it also refers to the skills of people in creating and managing businesses.

Opportunity cost

What is given up as a consequence of a particular decision or choice.

“Primary sector (or primary industry)

Organisations that extract the Earth’s natural resources.

Secondary sector (or secondary industry)

Organisations that use raw materials to manufacture goods or to construct items.

Tertiary sector (or tertiary industry)

Organisations that provide services to consumers or to other organisations.

Interest rate

The cost of borrowing money or the reward for saving money, expressed as a percentag.

Exchange rate

The price of one currency expressed in terms of another, for example, £1 = $1.50