Business-The nature of business

Why are humans considered economic animals?

Because we use products to satisfy our basic needs and wants

What is direct production?

When humans would all their needs themselves without the aid of other and without the facility of money

What is barter?

The exchange of goods and services without the use of money

what were some things used for exchange?

Feathers, shells, animal teeth

Some advantages of barter?

It was possible for persons to dispose of the surplus they had

It allowed persons to obtain a wider range of things they wanted

It assisted in productivity because it allowed persons to specialize

Disadvantages of Barter?

-Lack of double coincidence of want

-No exchange rate

-Divisibility of goods

-Inability to store

Money?

Any item that is willing excepted in exchange for goods and services.

Characteristics of money

Portable

Acceptable

Durable

Scarce

Homogeneous

Divisible

3 Functions of Money

Medium of exchange-It facilitates trade

Measure of value

Standard of deferred-Payment may be made at a future date

Legal tender?

What the state has decided is acceptable up to any amount

Instruments of exchange?(Payment methods)

Coins(Token money)

Banknotes(Paper money or fiat money)

Cheques

Credit Card and Debit Card

Bill of exchange

Electronic funds Transfer(EFT)

Internet banking

Standing order(Banker’s-order)

Tele-banking

Documentary Credit

Coins?

Have limited legal tender up to a specified amount. Used for purchasing small value items.

Cheques

NOT legal tender, written order by you, the drawer to the bank, the drawing to pay a specific account from a particular bank account.

Credit Card and Debit Card?

Small plastic cards utilized as a form of payment in business transactions.

Bill of Exchange

A written order that binds one party to pay a fixed sum of money to another at a predetermined future date

Internet Banking

Allows customers to bank at any time of the day from the convenience of their own home, office or any other location.

Standing Order(Bankers order)

Convenient way of making regular payments of a specific amount to a specific person or organization so that it goes through at a particular time.

Tele-banking

High level customers speak directly via telephone to banking personnel regarding an issue or queries regarding their bank account

Enterprise?

A project, venture or business activity set up to achieve a goal often including initiative and risk

Loss?

When a business’s expenses are greater than the income it earns during a period.

Trade

The buying and selling of goods services between people, businesses or countries.

Entrepreneurship

The process of identifying a business ideas, taking risks, and organising resources to start and run a business.

Profit

The financial gain when revenue is higher than costs and expenses.

Organization

A group of people working together in a more structured way to achieve common goals.

Producer

A person or business that makes or grows goods or provides services for sale

Economy

The system by which a country or region produces, distributes and consumes goods and services

Services

Intangible activities provided to meet needs cap (Teaching, banking, transport, cleaning etc)

Specialization

Focusing on one task, product or area of work to become more skilled or efficient at it.

Market

Any place where buyers and sellers meet to exchange goods and services.

Commodity

A basic good that is bought and sold, often in large quantities, such as wheat, oil, coffee beans,

Labor

Human effort, skills and time used to produce goods or services

Capital

Money, tools, Machinery, buildings, or other resources used to produce goods and services

Goods

Physical items that satisfy human needs such as clothes, food or furniture