commerce Flashcards
(20 cards)
define choice
when we have to make a economics decision to choose between resources.
define opportunity cost
Next best alternative after a choice has been made between alternatives.
What are we limited by
Personal needs like skills, time family
Whats scarcity
when there are not enough resources in relation to the unlimited wants for it
Define economics
How people as individuals or groups choose to use their limited or scarce resources to
satisfy their unlimited needs and wants.
Define Budget
A budget is a plan of expected income and expenses over a period of time eg for a week.
Why would you need to prepare a budget if you wanted to borrow money to buy an
expensive item such as a house?
The bank would not want to lend you money unless it was sure that you could pay it back in
the required time-frame. By budgeting correctly you could show the bank your income and
expenses and convince them that you could repay your debt.
Whats discretionary money
Discretionary spending is money that you choose to spend on whatever you would like
How to calculate a budget
Estimated income - estimated expenses = Surplus/Deficit
How to calculate a Income statement
Income - expenses = Profit/Loss
How to calculate a financial position.
Assets - Liabilities = Net Assets. = closing capital
Define income
The amount of money coming into the business eg sales, other income (rent received,
interest received)
Define Expenses
The amount of money spent generating the sales eg, telephone, rent, wages
Define Liabilities
The amount the business owes to other parties eg loan. Accounts payable
Define Assets
The amount the business owns eg land, property, shares in another company, cash at bank,
inventory (stock)
Define Business interpreter
A Business entrepreneur is a person who organises and manages a business
undertaking, assuming the risk for the sake of profit
What are the 4 P’s
P Product
P Place (Distribution)
P Price
P Promotion
Define ceteris parabis
“all other things stay the same.”
“If the price of a product drops, quantity demand will rise,
Define swot
S. Strengths.
W. Weaknesses.
O. Opportunities.
T. Threats
Explain the difference between a social enterprise and a business.
Social enterprises generate income through trading
products or services, and the majority of any revenues are reinvested back
into their core mission. They are not-for-profit organisations.
A business’ main goal is to make a profit. This is for the benefit of the owners.
