Business

Business Activity

The process of combining resources to produce goods and services that satisfy human needs and wants.

Needs

Essential goods and services required for survival, such as food, water, and shelter.

Wants

Non-essential items that people desire but are not required for survival, such as luxury goods or entertainment.

Scarcity

The economic problem arising because there are unlimited wants but limited resources to satisfy them.

Opportunity Cost

The concept that represents the cost of the next best alternative when making a choice.

Factors of Production

Resources used in the production process, including land, labor, capital, and enterprise.

Land (Factor of Production)

Natural resources available for production, such as oil, wood, and minerals.

Labour (Factor of Production)

The human effort used in the production process.

Capital (Factor of Production)

Man-made resources used to produce other goods, like machinery and tools.

Enterprise (Factor of Production)

The initiative and risk-taking of an entrepreneur who organizes the other factors of production.

Revenue

The total amount of money a business brings in from the sale of goods or services.

Added Value

The difference between the selling price of a finished product and the cost of raw materials.

Calculation of Added Value

Added Value = Selling Price - Cost of Materials/Inputs.

Primary Sector

Involved in the extraction and harvesting of natural resources, such as farming and mining.

Secondary Sector

Involved in manufacturing and processing raw materials into finished goods, like car manufacturing.

Tertiary Sector

Involved in providing services to consumers or businesses, including banking and retail.

Private Sector

Businesses owned and controlled by individuals or groups, typically focused on profit.

Public Sector

Organizations owned by the government that provide essential services to the public.