Business activity

Business activity

The process of producing goods and services to satisfy consumer demand

Need

A good or service which is essential to living

Want

A good or service which people would like, but is not essential for living

economic problem

unlimited wants cannot be met because there are limited factors of production, creating scarcity

factors of production

The resources needed to produce goods and services

factors of production (4)

-Land

-Labour

-Capital

-Enterprise

Land

all natural resources such as minerals, ores, fields, oil, and forests

Labour

The number of people available to work

Capital

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

Enterprise

people prepared to take the risk of setting up businesses

Scarcity

There are not enough goods and services to meet the wants of the population

Opportunity cost

The next best alternative given up

Specialisation

People and businesses concentrate on what they are best at

What does specialisation reduce

Reduces the cost of production

Division of labour

Production is divided into separate tasks and each employee does just one of those tasks

advantage of division of labour on employees and what does it lead to

Employees become far more efficient and this increases the productivity of labour

What types of goods and services do businesses produce (3)

Consumer goods

Consumer services

Capital goods

Consumer goods

Products which are sold to the final consumer which can be seen and touched

Types of Consumer goods (2)

Durable

Non-durable

Durable consumer goods

Goods that can be used over and over again

Non-durable goods

Goods that can only be used once

Consumer services

Products sold to the public but cannot be seen or touched

Capital goods

Products sold to other businesses to help them in their production process

Adding value

Increasing the worth of a product by improving it or making it more desirable to customers

Ways a business can increase its added value (4)

-Branding

-Excellent service quality

-Product features

-Convenience