Igcse Business Vocabulary & Summary: Key Concepts and Definitions - Studocu

What is defined as the economic problem?

An economic issue that occurs when there are unlimited wants but limited resources to satisfy those wants, leading to scarcity.

What are the four factors of production represented by the acronym CELL?

Land, Labor, Capital, and Enterprise, which are limited in number ($4$ factors).

What is opportunity cost?

The next best alternative given up by choosing an option.

What is the division of labor?

A form of specialization where the production process is split up into different tasks with each worker performing one.

What is de-industrialization?

A process that occurs when the secondary sector of a country becomes less important.

What is the formula for calculating capital employed?

$$\text{Shareholder's equity} + \text{non-current liabilities}$$

What is horizontal integration?

When one firm merges with another in the same industry in the same economic sector.

What is conglomerate integration?

When one firm merges with another from a completely different industry (diversification).

What is meant by limited liability?

The liability of shareholders in a company is only limited to the amount they invested.

According to F.W. Taylor's motivation theory, why do people work?

People work for one reason: money.

What is the primary difference in payment frequency between a wage and a salary?

A wage is payment for work paid weekly, whereas a salary is payment for work paid monthly.

How do job enlargement and job enrichment differ?

Job enlargement adds extra tasks of a similar work level to a job description, while job enrichment adds tasks that require more skill or responsibility.

What is the span of control?

The number of subordinates working under a manager.

What distinguishes autocratic leadership from democratic leadership?

In autocratic leadership, managers are in charge and all orders must be followed, whereas in democratic leadership, other employees are involved in the decision-making process.

How are part-time and full-time employment defined by hours worked per week?

Part-time employment is working between $1$ and $30\text{--}35$ hours a week, while full-time employment is working $35$ hours or more a week.

What is the formula for Price Elasticity of Demand (PED)?

$$PED = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}$$

What is price skimming?

A pricing strategy where a high price is set for a new product entering the market.

What does the Japanese term Kaizen mean?

Continuous improvement through the elimination of waste.

What is Just-in-time (JIT) production?

A production method that involves reducing or virtually eliminating the need to hold inventories of raw materials or unsold inventories of the finished product, where supplies arrive when they are needed.

What is the formula to calculate the break-even level of output?

$$\frac{\text{Total fixed costs}}{\text{Contribution per unit}}$$

How does quality control differ from quality assurance?

Quality control checks for quality at the end of the production process (often using inspectors), while quality assurance checks for quality standards throughout the production process by employees.

What is the formula for the Acid Test Ratio?

$$\frac{\text{Current assets} - \text{inventories}}{\text{Current liabilities}}$$

What are the four successive stages of the business cycle?

Growth, Boom, Recession, and Slump.

What constitutes social costs in a cost-benefit analysis?

$$\text{Social costs} = \text{Private costs} + \text{External costs}$$

What is a consumer boycott?

When consumers decide not to buy products from businesses that do not act in a socially responsible way.