The purpose and nature of businesses

Goods

Tangible physical items produced for purchase, such as smartphones, clothing, or cars.

Services

Intangible non-physical products provided to consumers, such as hair styling, banking, or train travel.

Needs

Basic items required for human survival, including water, food, shelter, and clothing.

Wants

Non-essential items or luxuries that individuals desire to improve their quality of life.

Business

An organization that combines resources to produce goods and services to satisfy needs and wants.

Primary sector

The stage of production involving the extraction or harvesting of raw materials from the earth.

Secondary sector

The stage of production focused on manufacturing and processing raw materials into finished or semi-finished goods.

Tertiary sector

The stage of production providing commercial services and retail opportunities to consumers and businesses.

Entrepreneur

A person who takes financial risks to set up and run a business.

Factors of production

The four main resources required to create goods and services: Land, Labour, Capital, and Enterprise.

Land (Factor of production)

Natural resources provided by nature that are used in the production process, such as mineral deposits, fields, water, and forests.

Labour (Factor of production)

The workforce, human effort, skills, and work put into producing goods and services.

Capital (Factor of production)

Man-made physical equipment and assets used to produce other goods and services, such as machinery, tools, factories, and vehicles.

Enterprise (Factor of production)

The skill and risk-taking initiative of an entrepreneur who combines land, labour, and capital to produce goods and services.

Added value

The difference between the final selling price of a product and the cost of the inputs used to manufacture it ($\text{Added Value} = \text{Selling Price} - \text{Cost of Inputs}$).

Opportunity cost

The cost of the next best alternative given up when making a business decision.