Business in the Real World

Question 1

Define the term ‘goods’.

Answer 1

Physical items like books.

Question 2

Describe the difference between needs and wants

Answer 2

Needs - Essential to life

Wants - Desired but can live without

Question 3

Give an example of a type of business you would find in:

1) Primary sector
2) Secondary sector
3) Tertiary sector

Answer 3

1 - Farming industry
2 - Factories
3 - Shops

Question 4

What is enterprise?

Answer 4

The process of identifying new business opportunities, and then taking advantage of them.

Question 5

Why might someone want to become an entrepreneur?

Answer 5

Make profit

Question 6

What qualities would you expect an entrepreneur to have?

Answer 6

Hardworking, Organised, Innovative

Question 7

List the four factors of production.

Answer 7

Land, Labour, Capital, Enterprise

Question 8

Define ‘opportunity cost’.

Answer 8

What’s given up to have or do something else

Question 9

Define ‘limited liability’.

Answer 9

The owners aren’t liable if something goes wrong so they don’t risk losing their personal possesions

Question 10

Describe a difference between a PLC and Ltd.

Answer 10

PLC shares are traded on the stock exchange whereas you must be invited to have shares in an Ltd.

Question 11

What is a not-for-profit organisation?

Answer 11

They don’t try to make profit for the owners.

Question 12

State two aims a business may have.

Answer 12

Survival, Growth

Question 13

Describe the difference between aims and objectives.

Answer 13

Objectives are more specific, they’re steps on the way to the aim

Question 14

What is meant by the term ‘stakeholder’?

Answer 14

A stakeholder is anyone who is affected by a business

Question 15

List four possible stakeholders in a business?

Answer 15

Owners, Consumers, Competitors, Employees, Suppliers

Question 16

What is the formula for calculating revenue?

Answer 16

Revenue = Sales x Price

Question 17

Give an example of a fixed cost.

Answer 17

Rent

Question 18

State a pro and a con of writing a business plan.

Answer 18

+ Forces owner to think carefully about decisions

- Can be costly and/or time-consuming

Question 19

List five factors that may affect the location of a business

Answer 19

Cost, Location of the market, Competition, Labour supply, Location of raw materials

Question 20

Define economies of scale.

Answer 20

A reduction in average unit cost that comes from producing on a large scale

Question 21

Define diseconomies of scale.

Answer 21

When growth leads to an increase in average unit cost

Question 22

What is organic growth?

Answer 22

When a business grows by expanding its own activities

Question 23

What is franchising?

Answer 23

When a company expands by giving other firms the right to sell its products

Question 24

Describe the difference between takeovers and mergers.

Answer 24

A merge is when two firms join together, a takeover is when a firm buys over half of another firms shares