Unit 1 Business studies

Question 1

What is a need?

Answer 1

A good or service essential for living.

Question 2

What is a want?

Answer 2

A good or service that people would like to have, but which is not essential for living.

Question 3

What is the economic problem?

Answer 3

Unlimited wants but limited resources, creating scarcity.

Question 4

What is scarcity?

Answer 4

Lack of sufficient products to satisfy total wants of population.

Question 5

What is opportunity cost?

Answer 5

The next best item given up by choosing another.

Question 6

What are factors of production?

Answer 6

Resources needed to produce goods and services, including land, labour, capital, and enterprise.

Question 7

What is a business?

Answer 7

An organisation that combines factors of production to make goods and services to satisfy people’s wants and needs.

Question 8

What is specialization?

Answer 8

People and businesses concentrate on what they are best at.

Question 9

What is division of labour?

Answer 9

Production is split into separate tasks and each worker specializes in one task.

Question 10

What is added value?

Answer 10

The difference between a product’s selling price and the cost of bought-in materials.

Question 11

What is the primary sector?

Answer 11

Businesses that extract and use natural resources to produce raw materials.

Question 12

What is the secondary sector?

Answer 12

Businesses that manufacture goods using the raw materials provided by the primary sector.

Question 13

What is the tertiary sector?

Answer 13

Businesses that provide services to consumers and other firms.

Question 14

What is de-industrialisation?

Answer 14

Decline in the importance of secondary, manufacturing industry.

Question 15

What is a mixed economy?

Answer 15

An economy that has both private sector businesses and public sector businesses.

Question 16

What is the private sector?

Answer 16

Businesses owned by people/individuals, not the government/state.

Question 17

What is the public sector?

Answer 17

Businesses owned by the government/state.

Question 18

What is privatisation?

Answer 18

The sale of public sector businesses to the private sector.

Question 19

What is an entrepreneur?

Answer 19

Someone who organises, operates, and takes the risk for a new business venture.

Question 20

What is a business plan?

Answer 20

The objectives and details of the operating finance and owners of a new business.

Question 21

What is capital employed?

Answer 21

The total value of capital used in a business.

Question 22

What is internal growth?

Answer 22

The business expands its existing operations, e.g., a retailer opening more shops.

Question 23

What is external growth?

Answer 23

The business expands by merging with or taking over another business.

Question 24

What is a merger?

Answer 24

The owners of businesses agree to join their firms together to form one business.

Question 25

What is a takeover?

Answer 25

A business buys out the owners of another business.

Question 26

What is horizontal integration?

Answer 26

The business integrates with another in the same industry at the same stage of production, e.g., two supermarkets.

Question 27

What is vertical integration?

Answer 27

The business integrates with another in the same industry but at a different stage of production.

Question 28

What is backward vertical integration?

Answer 28

Integration towards suppliers.

Question 29

What is forward vertical integration?

Answer 29

Integration towards the market/customer.

Question 30

What is conglomerate integration?

Answer 30

The business integrates with another but in a different industry, also known as diversification.

Question 31

What is a sole trader?

Answer 31

A type of business structure in which the business is owned by one person.

Question 32

What is limited liability?

Answer 32

The obligation of owners/shareholders for the debts of the business is restricted to the amount invested.

Question 33

What is unlimited liability?

Answer 33

The owners of a business can be held responsible for the debts of the business they own.

Question 34

What is a partnership?

Answer 34

The business is jointly owned by two or more people.

Question 35

What is a partnership agreement?

Answer 35

The written and legal agreement between business partners.

Question 36

What is an unincorporated business?

Answer 36

A business without separate legal identity from its owners, e.g., sole trader and partnership.

Question 37

What is an incorporated business?

Answer 37

A business with separate legal identity from its owners, e.g., a limited company.

Question 38

Who are shareholders?

Answer 38

The owners of a limited company.

Question 39

What is an annual general meeting?

Answer 39

A legal requirement for all companies where shareholders can attend and vote on the Board of Directors.

Question 40

What are dividends?

Answer 40

Payments made to shareholders from the profits (after tax) of a company.

Question 41

What is a joint venture?

Answer 41

Two or more businesses start a new project together sharing capital, risk, and profits.

Question 42

What is a franchise?

Answer 42

A business based upon the use of the brand names, promotional logos, and trading methods of an existing successful business.

Question 43

What is a public corporation?

Answer 43

A business, in the public sector, that is owned by the state.

Question 44

What are business objectives?

Answer 44

The aims or targets that a business works towards.

Question 45

What is profit?

Answer 45

Total income (revenue) of a business less total costs.

Question 46

What is market share?

Answer 46

The proportion (%) of total market sales held by one brand or business.

Question 47

What is a social enterprise?

Answer 47

An organisation with profit, environmental, and social objectives.

Question 48

What is a stakeholder?

Answer 48

Any person or group with a direct interest in the performance and activities of a business.