1.1 Business activity Flashcards

1
Q

What are needs and wants?

A
  • Needs: goods or services that are essential to living

- Wants: good or services which people would like, but not essential for living

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2
Q

What is scarcity?

A

When there are not enough goods and services to meet the wants of the population

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3
Q

What is opportunity cost?

A

The benefit that could have been gained from an alternative use of the same resource

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4
Q

What is specialisation and why is it important? Examples?

A

Specialisation: the focus on specific tasks and activities. It can lead to increased production levels, and result as over-concentration on particular activities and products.
- It is important because this means that the business is efficient and it reduces costs of production.

Types of specialisation:

  • Specialisation by region / country
  • Specialisation by factors of production
  • Specialisation by businesses
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5
Q

Name the advantages and disadvantages of specialisation

A

Ads:

  • Resources can be focused on their most productive lines.
  • Focusing on a set task enables an individual, company, region or country to become more productive in that task.
  • Larger outputs can be produced at lower unit costs
  • Concentration of specialists enables the sharing knowledge and skills between specialists

Disads:

  • Over-reliance on a set task or product -> specialists become redundant
  • Specialists spend all their time doing the same or similar things with little opportunity for variety
  • Lack flexibility
  • Delays or holdups in one area can slow down the whole process
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6
Q

What is added value and how can it be increased?

A

Added value: when a business tries to add value at every stage of the production process so that they can sell the product or service to customers at a greater price.

How to add value?

  • Branding
  • Adding special features
  • Provide excellent service
  • Conveniency
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7
Q

What is the purpose of business activity?

A

To create products and services

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