Business IGCSE Flashcards
Chapter 1 (20 cards)
Need
Good or Service essential for living
Want
Good or Service which people would like to have but which is not essential for living. People’s wants are unlimited
Economic Problem
There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity
Factors of production
those resources needed to produce goods and services. There are four factors of production and they are in limited supply
Scarcity
Lack of sufficient products to fulfil the total wants of the population
Opportunity cost
Next best alternative given up by choosing another item
Specialisation
Occurs when people and businesses concentrate on what they are best at
Division of Labour
When the production process is split up into different tasks and each worker performs one of those tasks. It is a form of specialisation
Business Activity
When businesses combine the factors of production to make goods and services which satisfy people’s wants
Added Value
Difference between the selling price and the cost of bought-in materials and components
Primary sector of industry
Extracts and uses the natural resources of Earth to produce raw materials used by other businesses
Secondary sector of industry
Manufactures goods using the raw materials provided by the primary sector
Tertiary sector of industry
Provides services to consumers and other sectors of industry
De -industrialisation
Occurs when there is a decline in the importance of the secondary
Mixed Economy
Has both a private sector and a public (state) sector
Capital
Money invested into the business by the owners
Entrepreneur
Person who organises, operates and takes the risk for a new business venture
Capital Employed
Total value of capital used in the business
Internal Growth (organic)
Occurs when a business expands its existing operations
External Growth (inorganic)
When a business takes over or merges with another business. It is often called integration as one business is integrated into another one
