Eduqas A level business Com 1 (Definitions Only)

What is an entrepreneur?

Someone who starts and runs a business.

What are needs?

"A limited number of essentials that must be satisfied if people are to survive

What are wants?

Unlimited things people would like in order to improve quality of life; they are not basic needs.

What is the primary sector?

Extractive industries that produce raw materials as well as producing final products

What is the secondary sector?

Manufacturing and construction industries that make build and assemble products

What is the tertiary sector?

Services that give value to people but are not physical goods.

What is a market?

"A meeting place between buyers and sellers where goods and services are exchanged

What is market share?

The sales of a business relative to the market size.

What is a niche market?

A specialised market segment where you cater for demand for products or services not currently being supplied by the main suppliers; it is a narrowly defined market segment.

What is market segmentation?

"Breaking down a market into sub-groups that share similar characteristics

What is monopolistic competition?

The situation in a market in which elements of monopoly allow individual producers or consumers to exercise some control over market prices.

What is demand?

The amount of a product that consumers are willing and able to purchase at any given price.

What is equilibrium price?

"In a free market

What is supply?

The amount of a product that suppliers will offer to the market at a given price.

What is elasticity of demand?

"The relationship between changes in demand

What is price elasticity of demand?

A measure of the sensitivity of demand to a change in price.

What is a price-elastic product?

A product where a proportionate increase or decrease in price leads to a proportionately greater increase or decrease in the quantity sold; elasticity is greater than one.

What is a price-inelastic product?

A product where a proportionate change in price leads to a proportionately smaller change in the quantity sold; elasticity is greater than zero but less than one.

What is income elasticity of demand?

A measure of how sensitive demand is to a change in income.

What are normal goods?

Goods for which demand increases as real incomes increase; they have positive income elasticity of demand of less than one.

What are luxury goods?

Goods for which demand grows at a faster rate than the increase in real income that caused the change in demand; they have positive income elasticity greater than one.

What are inferior goods?

Cheap substitute goods that people prefer to buy when their income is reduced; they have negative income elasticity.

What is market research?

"The process of gathering primary and secondary data on the buying habits

What is quantitative research?

"Research that involves the collection of data that can be measured

What is qualitative research?

"Research that involves the collection of data about attitudes

What is a sample?

A group of respondents to a market research exercise selected to be representative of the views of the target market as a whole.

What is quota sampling?

A sampling method where the population is segmented into a number of groups that share specific characteristics.

What is random sampling?

A sampling method in which every member of the population has an equal chance of being interviewed.

What are goods?

Items produced by the conversion of raw materials into finished products by the secondary sector; they are tangible or physical products.

What are consumer goods?

Goods that are used by the consumer.

What are producer goods?

Items bought by another business and used to help make other goods.

What are single-use goods?

Items that can only be used once.

What are durable goods?

Items that can be used over and over again.

What are aims?

"The long-term intentions that provide a focus for setting objectives; they are usually expressed qualitatively

What are objectives?

"Medium- to long-term targets that can give a sense of direction to a manager

What are public goods?

Goods that would not be provided in a free market system because businesses would not be able to charge for them.

What are merit goods?

Goods that could be provided by the free market but which policy makers recognise would be under-consumed.

What are services?

"Intangible tasks performed in return for payment

What is a sole trader?

"A business owned and run by one individual

What is a partnership?

A business owned and run between 2 and 20 people.

What is a Deed of Partnership?

A legal agreement setting out the rights and responsibilities of the partners.

What is a private limited company (Ltd)?

Usually a small business whose shares do not trade on the stock exchange.

What is a public limited company (PLC)?

"Usually a large

What is a social enterprise?

"A for-profit or not-for-profit business with primarily social objectives

What is a charity?

A non-profit-making organisation established with the aim of collecting money from individuals and spending it on a cause.

What is business location determined by?

"Business location for new and existing businesses is still largely determined by access to customers

What is infrastructure (modern definition)?

"A broader definition that includes electronic communication systems

What is working capital?

The money needed to finance the day-to-day running of the business.

What is investment capital?

Capital that helps the business grow.

What is capital expenditure?

Money invested in fixed assets such as buildings and equipment.

What is a loan?

"Borrowing a fixed amount for a fixed period of time

What is an overdraft?

"The facility to withdraw more from an account than is in the bank account

What is trade credit?

When businesses buy items such as fuel and raw material and pay for them at a later date.

What is factoring?

A method of turning invoices into cash.

What is leasing?

When a company gains use of a productive asset without ever owning it.

What is sales revenue / turnover?

The money a business makes from sales; the total amount of money a business receives from its sales is called total revenue.

What are fixed costs?

Costs that do not vary with output; they only change in the long run.

What are variable costs?

Costs that vary in direct proportion to changes in output.

What are total costs?

Fixed costs plus variable costs.

What are semi-variable costs?

Costs that contain both fixed and variable elements.

What is profit?

Total revenue minus total costs.

What is contribution?

The difference between the income generated from sales and the variable costs of producing the goods to generate those sales.

What are direct costs?

Costs that arise specifically from the production of a product or the provision of a service.

What are overheads / indirect costs?

Costs not directly related to production.

What is break-even analysis?

A diagram that shows the level of output where a business does not make a profit nor a loss.