SECTION 1. Sector 1. Understanding Businnes Activity Flashcards
(8 cards)
1
Q
What are needs and wants?
A
Needs - is a good or service essential for living
Wants - is a good or service which is not essential for living, wants are unlimited
2
Q
The economic problem
A
Unlimited wants with limited resources to produce the goods and services to satisfy those wants.
Leads to scarcity
3
Q
4 factors of production
A
- Land
- Labour
- Enterprise
- Capital
4
Q
What is opportunity cost?
A
The next best alternative forgone when making a decision
5
Q
What is specialization?
A
Occurs when people or busi8ness concentrate on what they are best at
6
Q
What is division of labour?
A
When the production process is split into different tasks for the workers to do
7
Q
What is added value?
A
Selling price of a product - the cost of brought in materials
8
Q
Why is added value important and how to increase it?
A
- can pay for other expenses such as labour costs
- increase selling price but keep cost of materials the same
- reduce cost of materials but keep the price the same
