Nature and Purpose of Business

A set of 50 flashcards covering identifying key business terms, economic vs. non-economic activities, classifications of industries, commerce components, and business risk.

What are tangible consumable items of daily use, such as sugar, pens, and furniture, called?

Goods

What is the term for intangible facilities offered to consumers?

Services

How is profit calculated based on income and expenses?

$$\text{Profit} = \text{Income} - \text{Expenses}$$

Under what condition does a business experience a loss?

When expenses are more than income ($\text{Loss} = \text{Expenses} - \text{Income}$)

What is the result if a product costs $70\,\text{AED}$ to produce but is sold for $50\,\text{AED}$?

A loss of $20\,\text{AED}$

What is defined as one who purchases a product for a value?

Customer

Which type of activities are undertaken with the object of earning money or a livelihood?

Economic Activities

What type of activity is a student teaching his younger brother or volunteering at a charity hospital?

Non-Economic Activity

How is 'Business' defined as an economic activity?

It is concerned with the production, purchase, and sale of goods and services with the object of earning profit by satisfying customer needs.

What is a 'Profession'?

An occupation that requires specialised knowledge and skill, where services are rendered to clients for a fee.

How is 'Employment' defined?

A human occupation where a person performs work assigned by an employer under an agreement or rules of services in return for a salary or wages.

What type of occupation is a doctor running her own private clinic?

Profession

What category of economic activity applies to a cashier working in a retail store?

Employment

A shopkeeper selling groceries in a supermarket falls under which category?

Business

What is the basic motive of a Business?

Profit

What is the reward for a Profession?

Fees

What is the reward for Employment?

Wages or Salary

In which economic activity is the transfer of interest possible with some legal formalities?

Business

Which economic activity has no specific code of conduct prescribed?

Business

What is the nature of risk in Employment?

No risk

What are the two subdivisions of Primary Industry?

Extractive Industries and Genetic Industries

Which industries are engaged in the extraction or production of wealth from soil, water, or air?

Extractive Industries

What is an example of an Extractive Industry?

Extracting minerals, fishing, or procuring timber from forests.

Which term refers to producing, breeding, and multiplying certain species of plants or animals?

Genetic Industries

Cattle breeding and poultry farming are examples of which industry type?

Genetic Industries

What category of industry is concerned with the conversion of raw materials into finished goods?

Secondary Industries (specifically Manufacturing Industries)

Which industry analyzes and separates different elements from the same minerals, such as an oil refinery?

Analytical industry

What type of industry combines various ingredients into a new product, such as a cement industry?

Synthetical industry

Which industry involves successive stages of manufacturing to produce goods like sugar or paper?

Processing industry

What is an Assembling industry?

An industry that assembles different components into a new product, such as computers or televisions.

Which industry is concerned with the construction of buildings, roads, bridges, and canals?

Construction Industry

Which industry provides support services to primary and secondary industries?

Tertiary Industries

According to the transcript, what is the formula for Commerce?

$$\text{Commerce} = \text{Trade} + \text{Aids to Trade}$$

Which activity helps remove the 'Hindrance of Person' in trade?

Trade

Which auxiliary to trade removes the 'Hindrance of Place'?

Transportation

Which auxiliary to trade removes the 'Hindrance of Time'?

Warehousing

How is the 'Hindrance of Risk' in business typically removed?

Insurance

Which auxiliary to trade removes the 'Hindrance of Information'?

Advertisement

What is Wholesale trade?

Buying goods from producers in large quantities and selling them to retailers in small quantities.

What is Retail trade?

Supplying the requirements of the consumers in small quantities by buying from wholesalers.

What is Import trade?

The purchasing of goods from a supplier in a foreign country for home use.

What is Export trade?

The selling of home goods to foreign countries.

What is Entrepot trade?

Importing foreign produced goods from some countries with the object of re-exporting them to other countries.

What term is used for the nominal amount paid for protection against business loss?

Premium

In business, what is the definition of Innovation?

Exploring and discovering ways and means by which products are made more useful to customers.

What is Business Risk?

The possibility of loss or the chance of loss.

Which risk involves both the chance for a gain and the chance for a loss?

Speculative risk

What are examples of Pure risk?

Fire, theft, earthquake, and strike.

What are the 'Human causes' of business risk?

Theft, bad debts, invalidated contracts, dishonesty, and carelessness.

What is the standard channel of distribution involving middle-men?

MANUFACTURERS $\rightarrow$ WHOLESALERS $\rightarrow$ RETAILERS $\rightarrow$ CUSTOMERS