The Purpose and Nature of Business Flashcards
(31 cards)
What is a business?
A business is an organisation that takes raw materials and, using raw materials and machinery, converts them into goods and services to satisfy the needs and wants of consumers
What are the four factors of production?
Land, Labour, Capital, Enterprise
What is Land?
All natural resources (raw materials) used by a business
What is Labour?
Al human mental and physical effort. a worker receives a wage as payment
What is Capital?
All goods and services made by humans to help them make other goods and services, this includes the factory and machinery
What is Enterprise?
The organisation of the other factors of production so that the business can make goods and services. Receives profit as a reward for taking risks.
Factors of goods
- Actual objects,
- Tangible
- Produced and consumed
Factors of Services
- Provided by other people or businesses
- Intangible
- Activities
What is a need?
A need is something humans absolutely need to survive
What is a want?
Humans don’t necessarily need it but we desire to have it
What does the customer do?
Buy the product
What does the consumer do?
Use the product
Reasons for starting a business
To be independent
To fill gaps in the market
To be their own boss
T provide a service
Skills and interests
Opportunity
Spotter
Risk
Taker
Decision
Maker
Creative
Thinker
Self
Motivated
Strong
Communicator
What is GDP?
Gross Domestic Product - how much everyone uses in a set time period
What is Opportunity Cost?
Whatever you are sacrificing for the business
3 Stages of Production
Primary, Secondary, Tertiary
Primary Sector
Natural resources (raw materials) are extracted.
Secondary sector
Raw materials are converted into finished products using capital and labour - aka manufacturing
