Business 1

Question 1

Define a need

Answer 1

A good or service essential for living

Question 2

Define a want

Answer 2

A good or service which people would like to have, but is not essential for living

Question 3

Define scaracity

Answer 3

Is the lack of sufficient products to full fill the total wants of the population

Question 4

Define opportunity cost

Answer 4

The next best alternative given up by choosing another item

Question 5

State the importance of specialisation

Answer 5

It results in higher output per worker, which increases productivity

Question 6

Define specialisation

Answer 6

Occurs when people and businesses concentrate on what they are best at

Question 7

Factors of production (4)

Answer 7

Land - the natural resources
Labour - workers
Capital -money needed to manufacturate
Enterprice - the skill and risk taking ability

Question 8

Define added value

Answer 8

The difference between the selling price of a product and the cost of brought in materials

Question 9

How added value can be increased (2)

Answer 9

Increasing the selling price but keep the cost of materials the same
Reduce the cost of materials but keep the price the same

Question 10

State the three economic sectors

Answer 10

Primary sector
Secondary sector
Tertiary sector

Question 11

What does the primary sector does

Answer 11

Where the eaw materials are extracted

Question 12

What does the secondary sector does

Answer 12

Idustry that manufactures the goods using the raw materials

Question 13

What does the tertiary sector does

Answer 13

Industry that provides services to customers

Question 14

What is chain of production

Answer 14

The process that links the 3 sectors together in the production process

Question 15

Mixed economy is set of two sectors, that are

Answer 15

Private sector
Public sector

Question 16

What is a private sector

Answer 16

Businesses run by private individuals

Question 17

What is a public sector

Answer 17

Owned and controlled by the government, provide good and services

Question 18

Define entrepreneur

Answer 18

A person who organizes, operates and takes the financial risk for a new business venture

Question 19

Characteristics of successful entrepreneurs

Answer 19

Self-confidence
Innovative
Risk taker

Question 20

Adv. of being an entrepreneur

Answer 20

Independece
Use of own skills/interests

Question 21

Disa. of being an entrepreneur

Answer 21

Risk of failing
Lack of business experience
Capital is needed

Question 22

What is a business plan

Answer 22

A document containing the objectives and important details about the operations, finance and owners of the business

Question 23

How business plans assist entrepreneurs

Answer 23

To help improve finance
Careful planing reduces risk

Question 24

Why governments support business start-ups

Answer 24

To reduce unemployment
To increase competition
To give more options to the citizens

Question 25

How governments support business start-ups

Answer 25

Grants Training schemes Enterprice zones - low cost permises to start-up

Question 26

Methods of measuring business size (3)

Answer 26

Number of people employed Value of output Capital employed

Question 27

Limitations of using number of people employed to measure a business size

Answer 27

Some firms use production methods which employ very few people but produce high output levels

Question 28

Limitations of using value of output to measure a business size

Answer 28

A high level of output does not mean that a business is large

Question 29

Limitations of using capital employed to measure a business size

Answer 29

A company may use labour-intensive methods of production and these can give low output levels

Question 30

The business size is useful to

Answer 30

Government Bank Competitors Possible investors

Question 31

Why the owners of a business may want to expand the business

Answer 31

Possibility of higher profits for the owner More status and presige for the owners

Question 32

Different ways in which businesses can grow

Answer 32

Internal growth External growth Horizontal integration Vertical integration

Question 33

What is internal growth

Answer 33

When a business expands its existing operations

Question 34

What is external growth

Answer 34

When a business takes over or mergers with another business, often called integration

Question 35

What is horizontal integration

Answer 35

When one business mergers or takes over another one in the same industry at the same stage of production

Question 36

What is vertical integration

Answer 36

When one business mergers or takes over another one in the same industry BUT at a different stage of production. Can be forward or backward

Question 37

What is take over

Answer 37

When one business buys the owner of another business.

Question 38

What is merger

Answer 38

When the owners of two businesses agree to join their businesses together to make one business

Question 39

Problems linked to business growth

Answer 39

Larger businesses are difficult to control Larger business leads to poor communication Expansion costs too much

Question 40

How problems linked to business growth might be overcome

Answer 40

Operate the business in smaller units Expand more slowly

Question 41

Why some businesses remain small

Answer 41

The type of industry the business operates in The market size The owners objectives

Question 42

Causes of business failure

Answer 42

Lack of managment skills Changes in the business environment Poor financial managment

Question 43

Why new businesses are at a greater risk of failing

Answer 43

Lack of finance and other resources Poor planing Lack of knowledge of decison-making

Question 44

State the types of business organisation (6)

Answer 44

Sole traders, Partnerships Private limited companies Public limited companies Franchises Joint ventures

Question 45

Define an unincorporated businesses

Answer 45

The owners of a business can be held responsible for the debts of the business they own.

Question 46

Examples of unincorporated businesses

Answer 46

Soletraders Partnerships

Question 47

Define a limited company

Answer 47

Owners (shareholders) can only lose the original amount they invested in the business if it fails

Question 48

Examples of limited company

Answer 48

Private limited company Public limited company

Question 49

What is a private limited company

Answer 49

Are businesses owned by shareholders, but they cant sell shares to the public

Question 50

What is a public limited company

Answer 50

Are businesses owned by shareholders but they can sell shares to the public

Question 51

Need/importance for business objectives

Answer 51

Give workers and managers a clear target to work towads Taking decisions will be based on the objectives Clear and measurable objectives Business managers can look at the improvement

Question 52

State the different types of business objectives

Answer 52

Business survival Profit Growth of the business Increase their market share

Question 53

Define a social enterprice

Answer 53

Has social objectives as well as an aim to make a profit to reinvest into the business

Question 54

Types of objectives social enterprices have

Answer 54

Social - support by providing jobs Environmental - to protect Financial - reinvest

Question 55

Define stakeholder

Answer 55

Any person or group with a direct interest in the performance and activities of a business

Question 56

State the internal stakeholders of a business

Answer 56

Owners Workers Managers

Question 57

State the external stakeholders of a business

Answer 57

Consumers Government The whole community Banks