Unit 1 - Key terms

Key terms & definitions

Industrial Revolution

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 survival (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