unit 1

Question 1

what is a business?

Answer 1

an organisation that produces goods or provides services to meet customer needs, typically for profit

Question 2

what are the 3 main purposes of business?

Answer 2

1. provide goods/services
2. meet customer needs
3. make a profit

Question 3

what is a good vs a services?

Answer 3

a good is tangible (e.g. a phone) a services is intangible (e.g. banking)

Question 4

what is the difference between profit and revenue?

Answer 4

revenue is total income from sales; profit is revenue minus cost

Question 5

state the formula for revenue

Answer 5

revenue = price x quantity sold

Question 6

what is a mission statement?

Answer 6

a brief summary of a business’s core purpose and values

Question 7

what are business objectives?

Answer 7

specific, measurable targets that help achieve a mission

Question 8

give 3 examples of common business objectives

Answer 8

1. increase profit
2. grow market share
3. improve customer satisfaction

Question 9

what is market share?

Answer 9

the % of total sales in a market controlled by one business

Question 10

define cost

Answer 10

the amount a business spends to produce goods or services

Question 11

what are fixed costs? give an example

Answer 11

costs that dont change with output, e.g. rent

Question 12

what are variable costs? give an example

Answer 12

costs that vary with output e.g. raw materials

Question 13

what is the formula for total costs?

Answer 13

total costs = fixed costs + variable costs

Question 14

what is profit?

Answer 14

the financial gain when revenue exceeds total costs

Question 15

what is the formula for profit?

Answer 15

profit = total revenue - total costs

Question 16

what are private sector businesses?

Answer 16

businesses owned by individuals or shareholders, not the government

Question 17

what are public sector organisations?

Answer 17

government-owned organisations that provide services like education or healthcare

Question 18

what is a sole trader?

Answer 18

a business owned and operated by one person

Question 19

what is a partnership?

Answer 19

a business owned by two or more people sharing profits and responsibilities

Question 20

what is a private limited company (Ltd)?

Answer 20

a business with limited liability and privately owned shares

Question 21

what is a public limited company (plc)?

Answer 21

a business with limited liability whose shares are sold on the stock exchange

Question 22

what is limited liability?

Answer 22

owners are only liable for the amount they invest in the business

Question 23

what is a shareholder?

Answer 23

an individual or institution that own shares in a company

Question 24

why do shareholders invest in companies?

Answer 24

to earn dividends and/or capital gains (increase in share value)

Question 25

what is a dividend?

Answer 25

a portion of a company's profit paid to shareholders

Question 26

what is market capitalisation?

Answer 26

total value of a company's issued shares: share price x number of shares

Question 27

what is the role of an entrepreneur?

Answer 27

to take risks and start businesses by organising resources and identifying opportunities

Question 28

what are stakeholders?

Answer 28

individuals or groups with an interest in a business (e.g. employees, customers, suppliers)

Question 29

what is the difference between internal and external stakeholders?

Answer 29

internal: part of the business (e.g. employees) external: outside the business (e.g. customers, suppliers)

Question 30

name 3 external environmental factors that affect buisnesses

Answer 30

1. economics (e.g. inflation) 2. legal (e.g. employment law) 3. technological (e.g. automation)

Question 31

what is opportunity cost?

Answer 31

the next best alternative foregone when making a decision

Question 32

what is the difference between profit maximisation and sales maximisation?

Answer 32

profit maximisation: focus on highest profit; sales maximisation: focus on highest sales volume

Question 33

what is social enterprise?

Answer 33

a business with social objectives that reinvests profits to achieve them

Question 34

what is not-for-profit organisation?

Answer 34

an organisation that doesnt aim to make profit but to benefit society (e.g. charities )

Question 35

whats the impact of inflation on businesses?

Answer 35

raises costs and may reduce consumer spending power.