Chapter 1 - Business Activity

Enterprise

________- All the people that have skills & those who have risk- taking abilities.

Opportunity cost

the sacrifice made of the second best option when making a choice or a decision

Businesses

________ combine scarce factors of production and employ people to make products (goods or services) which satisfy peoples wants.

Specialisation

________- Divisions of labour in the production process- different tasks split up to workers.

Capital

________- All finance, machinery & equipemnent required for manufacturing goods.

competetion

Increasing ________- therefore businesses need to keep costs low.

Monopoly

the exclusive possession or control of the supply or service

The shortage of goods and services

we are not able to have everything

Increasing competetion

therefore businesses need to keep costs low

specialised task training

increasing productivity (out put per worker)

save time

from moving people from different stages of production

Added Value =

selling prices - cost of components (or materails)

The factors of production are (remember CELL)

Capital, Enterprise, Land & Labour

What is the economic problem?

Unlimited wants + Limited resources = scarcity

Specialization

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

What is the aim of a business

Businesses combine scarce factors of production and employ people to make products which satisfy people’s wants

Mixed economy

an economic system that combines private and state enterprises

Needs

Needs are essential goods & services. They satisfy the basic things in life

Wants

Wants are non-essential goods & services that people would like to have. They are linked to luxuries & our hobbies. Wants are unlimited.