Business Studies Flashcards

Flashcards for Cambridge IGCSE and O Level Business Studies, focusing on key vocabulary and concepts from the textbook.

Need

A good or service essential for living.

Want

A good or service which people would like to have, but which is not essential for living. People’s wants are unlimited.

The economic problem

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity.

Factors of production

Those resources needed to produce goods or services. There are four factors of production and they are in limited supply.

Scarcity

The lack of sufficient products to fulfil the total wants of the population.

Opportunity cost

The next best alternative given up by choosing another item.

Specialisation

Occurs when people and businesses concentrate on what they are best at.

Division of labour

When the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.

Businesses

Combine factors of production to make products (goods and services) which satisfy people’s wants.

Added value

The difference between the selling price of a product and the cost of bought-in materials and components.

Primary stage of production

This stage involves the Earth’s natural resources.

Secondary stage of production

This stage involves taking the materials and resources provided by the primary sector and converting them into manufactured or processed goods.

Tertiary stage of production

This stage involves providing services to both consumers and other businesses.

Private sector

Businesses not owned by the government. These businesses will make their own decisions about what to produce, how it should be produced and what price should be charged for it.

Public sector

Government (or state) owned and controlled businesses and organisations. The government, or other public sector authority, makes decisions about what to produce and how much to charge consumers.

Privatisation

Selling some public sector businesses – owned and controlled by government – to private sector businesses.