Business mocks

Needs

the things you think are necessary for living

Wants

Things you would like to be able to buy and own

The economic problem

cause of the shortage/scarcity of goods and services is there are not enough factors of production to match the populations needs and wants

Economic problem equation

unlimited ones+ limited resources equal scarcity (economic problem)

Four factors of production

Capital - the finance machinery equipment needed to manufacture goods

Enterprise - the skill or risk taking ability of the person who brings other resources or factors of production to produce goods and services (e.g. owner of the business – entrepreneur.)

Land - the natural resources provided by nature (forests, oil, metals, and gases)

Labour - number of available people to make products products

Opportunity cost

the second best alternative, besides the first choice

Specialisation

when we concentrate on a product or a task where we are best at. The division labours occurs when the process of production is being broken down into many tasks.

Why is specialisation so common

• specialised machinery/technology are now widely spread

• increased competition means that business will keep costs low

• People recognise that a higher living standard can result to specialisation

Division of labour

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

Advantages of specialisation

workers are trained in one task and specialise in this (increases efficiency and output), less time is wasted moving from one workbench to another, quicker and cheaper to train workers (fewer skills needed to be taught).

Disadvantages of specialisation:

Worked can become bored as they are only doing one job (drop in efficiency), can’t do the job if one worker is absent (whole process is stopped)

Business

Business combine factors of production to make products which satisfy people’s wants.

Purpose of business activity

Combines scarce factors of production to produce goods and services (products)
Produce goods and services which are needed to satisfy the needs and wants of the population

Employs people as workers and pays them wages to allow them to consume products made by other her people.

Added value

added value is the difference between the selling price of a product and the cost of bought- materials and components. In simple terms it is the increased word that a business creates for a project. The difference between a business pays its supplier and the price it charges.