Chapter 1

Question 1

Define the term need

Answer 1

A good or service that is essential to living

Question 2

Define the term want

Answer 2

A good or service that people would like to have but is not essential to living. People’s wants are unlimited.

Question 3

Define the factors of production

Answer 3

Resources needed to produce goods or services. There are 4 factors and they are in limited supply.

Question 4

Define the term scarcity

Answer 4

The lack of sufficient products to fulfil the total wants of the population / people.

Question 5

Define the term opportunity cost

Answer 5

The next best alternative foregone.

Question 6

Define division of labour

Answer 6

When production process is split into different tasks and each worker performs one of these tasks.

Question 7

Define the term business

Answer 7

The combination of the factors of production to make goods or services.

Question 8

Define the term added value

Answer 8

The difference between selling price and the cost, from materials and components, of a product.