Unit 1 - Key terms

Key terms & definitions

Industrial Revolution

1750-1900, increased use of machines and mass production of goods

Customers

The people who ^^buy^^ a business’s goods or services

Demand

The quantity of goods or services that a consumer is ^^willing and able to buy^^ at a given price

Need

Items that are ^^essential for surviva^^l (Food, water, warmth, shelter)

Want

Items that are ^^desired^^ and often ^^make life more enjoyable^^ but ^^aren’t essential to survival^^

Resources

^^Physical items or labour^^ (provided by employees) used to ^^produce goods and services^^

Factors of Production

The resources combined to make goods and services (^^land, labor, capital and enterprise^^)

Consumers

The person who ^^uses^^ a business’s goods or services

Added value

The amount ^^put onto the cost^^ of the ^^materials/components^^ to make a product or service => creating the ^^selling price^^

Profits

The ^^money^^ a business has ^^after all costs have been covered^^ (sales revenue - total costs = profit)

Basic Economic Problem

Needs and wants are ^^unlimited^^, but the resources required to satisfy these are ^^limited^^

Scarcity

The ^^lack of or limited availability^^ of resources

Renewable

A resource that ^^can be used again and again^^ without ever running out

Opportunity cost

An ^^alternative lost^^ when a decision is made

Efficient

When a business ^^increases its output^^ by ^^reducing the level of wasted resources^^ it uses to produce them

Specialisation

The process where a business focuses on a ^^particular industry or segment of a market^^

Division of labour

When employees ^^concentrate on a part of the manufacturing process^^ and become highly skilled => greater efficiency on individual tasks

Efficiency

The ability to ^^avoid wasting material, energy, effort and time^^ while producing something

Motivation

Factor that ^^influence and encourage the behaviours required of employees^^ to meet ^^business goals^^ efficiently

Economy

A system that organises the money, industry and trade of a country or region

Extraction

The ^^mining of any valuable materials and minerals^^ from the Earth

Production

The process of ^^making or manufacturing a product^^ from ^^components or raw materials^^

Primary Sector

The removal of natural materials from the land to gather the ^^raw material or food^^ needed for the ^^production process carried out by other businesses^^

Secondary Sector

The process of ^^combining the raw materials^^ extracted from the primary sector ^^resulting in finished goods^^

Tertiary Sector

Offers ^^services^^ to other businesses and consumers in the economy

Channels of distribution

The ^^route^^ through which a product travels between the ^^manufacturer and the final consumer^^

Deindustrialisation

The ^^reduction^^ in the ^^level of production and manufacturing of goods^^ in a particular economic region or economy

Mixed economies

Comprises of activity from both the ^^private and public sectors^^

Private Sector

All business organisations that are ^^owned and operated by individuals^^ or groups, with ^^no government involvement^^

Public Sector

All business organisations that are ^^owned and operated by the government^^

Revenue

The ^^money^^ gained by a business through the ^^sales of goods or services^^ (Price x Quantity sold = revenue)

Entrepreneur

A person who ^^starts a business^^, usually because they have an ^^idea for a new product^^ or because they’ve found a way to meet other needs of customers that have not been previously met

Business Plan

A ^^report^^ that outlines the ^^objectives of a business^^ and how the business ^^plans to achieve them^^

Bankruptcy

When a business can ^^no longer pay its debts^^ and the ^^bank^^ ^^takes its assets^^, like property, to recover some of all of what is owed

Stakeholder

Anyone with an ^^interest in a business and its activities^^

Cash flow

The ^^movement of cash^^ (working capital) ^^into and out of the business^^

Assets

^^Anything that is owned by a person or a business^^

Shareholders

A person who ^^owns shares in a limited company^^, making them one of the ^^business’s owners^^

Market share

The ^^sales of a business’s products^^ as a ^^percentage of the total sales of all businesses in the same market^^

Economies of scale

The ^^reduction of average costs^^ as a result of a ^^businesses growth in size^^

Social enterprise

A business which has a ^^social objective^^ as well as an aim ^^to make profit^^