Business test

Business activity

The process of producing goods and services to satisfy consumer demand.

Need

A good or service which is required to survive.

Want

A good or service which people would like, but is not a requirement to survive.

Factors of production

The resources needed to produce goods and services.

Land

All natural resources used in production.

Labour

The number of people available to work.

Capital

Machinery, equipment, and finance needed for production of goods and services.

Enterprise

The people prepared to take the risk of setting up businesses.

Opportunity cost

The cost of giving up one opportunity in order to take another one.

Specialization

People and businesses concentrate on what they are best at.

Benefits of specialization

Increases efficiency, reduces the cost of production, benefits the customer.

Division of labor

Production is divided into separate tasks, with each employee doing just one task.

Advantages of division of labor

Increases efficiency and output, quicker and cheaper, less to be taught.

Disadvantages of division of labor

Efficiency might fail, and production might be stopped.

Consumer goods

Goods made for use by other businesses.

Consumer services

Non-tangible products such as transport.

Capital goods

Physical goods made to be used by other businesses.

Semi-finished goods

Goods processed from raw materials used in manufacturing finished goods.

Community services

Services provided by the government (e.g., water and trash removal).

Commercial services

Activities involved in getting goods to consumers (e.g., insurance and advertising).

Added value

Increased utility of a product as it passes through different production stages.

Primary sector

All industries that extract natural resources for processing.

Secondary sector

Business activity that processes and manufactures natural resources into finished goods.

Tertiary sector

Providing services to consumers and other businesses.

Chain of production

The change between primary, secondary, and tertiary sectors.

Industrialization

The growing importance of secondary sector business activity and reduced importance of the primary sector.

De-industrialization

The growing importance of the tertiary sector and reduced importance of the secondary sector.

Mixed economy

An economy where resources are owned and controlled by both private and public sectors.

Private sector

The part of the economy owned and controlled by individuals and companies for profit.

Public sector

Services provided by the government.

Market economy

Business and industry managed by individuals and private enterprise.