WHY IS BUSINESS ACTIVITY NEEDED?

Question 1

DEFINE ECONOMIC ACTIVITY

Answer 1

REFERS TO THE PRODUCTION OF GOODS AND THE RENDERING OF SERVICES FOR WHICH PEOPLE PAY

Question 2

DEFINE ECONOMIC PROBLEM

Answer 2

RESULTS FROM THERE BEING UNLIMITED WANTS BUT LIMITED RESOURCES TO PRODUCE THE GOODS AND SERVICES TO SATISFY THOSE WANTS; CREATES SCARCITY

Question 3

DEFINE SCARCITY

Answer 3

IS THE LACK OF SUFFICIENT PRODUCTS TO FULFILL THE TOTAL WANTS OF THE POPULATION

Question 4

DEFINE OPPORTUTINTY COST

Answer 4

IS THE NEXT BEST ALTERNATIVE GIVEN UP BY CHOOSING ANOTHER CHOICE OR AN ITEM

Question 5

DEFINE FACTORS OF PRODUCTION

Answer 5

ARE THOSE RESOURCES NEEDED TO PRODUCE GOODS OR SERVICES. THERE ARE FOUR FACTORS OF PRODUCTION AND THEY ARE LIMITED IN SUPPLY

Question 6

NAME AND EXPLAIN THE FOUR FACTORS OF PRODUCTION

Answer 6

> LAND
-REFERS TO ALL THE NATURAL RESOURCES PROVIDED BY NATURE, e.g. FIELDS, FOREST, OIL, GAS, METALS AND OTHER MINERAL RESOURCES

> LABOUR
- REFERS TO THE EFFORTS OF PEOPLE NEEDED TO MAKE PRODUCTS

> CAPITAL
- REFERS TO THE FINANCE, MACHINERY AND EQUIPMENT NEEDED TO PRODUCE GOODS

> ENTERPRISE
- REFERS TO THE SKILLS AND RISK TAKING ABILITY FOR THE PERSON WHO BRINGS RESOURCES TOGETHER TO PRODUCE GOODS AND SERVICES CALLED AN ENTREPRENEUR

Question 7

DEFINE NEEDS

Answer 7

REFERS TO GOODS AND SERVICES WHICH ARE ESSENTIAL FOR SURVIVAL

Question 8

DEFINE WANTS

Answer 8

REFERS TO SOMETHING WE CAN LIVE WITHOUT, BUT WE WANT IT. IT ISNT AN ESSENTIAL FOR LIVING MEANING WE CAN LIVE WITHOUT THEM. PEOPLES WANTS ARE UNLIMITED

Question 9

DEFINE UNLIMTED WANTS

Answer 9

MEANS THAT PEOPLE NEVER GET ENOUGH. WE WANT MORE THAN WHAT WE CAN HAVE

Question 10

DEFINE LIMITED RESOURCES

Answer 10

LIMITED RESOURCES MEANS THAT THERE ARE NOT ENOUGH RESOURCES TO PRODUCE THE THINGS THAT PEOPLE WANT AND NEED. TOGETHER IT CREATES SCARCITY, MEANING IT IS DIFFICULT FOR PEOPLE TO FIND THE SPECIFIC PRODUCTS THEY NEED AND WANT

Question 11

DESCRIBE THE PURPOSE OF BUSINESS ACTIVITY

Answer 11

-TO IDENTIFY AND SATISFY THE NEEDS AND WANTS OF THE CUSTOMERS
- TO COMBINE SCARE FACTORS OF PRODUCTION IN ORDER TO PRODUCE GOODS AND SERVICES
- BUSINESSES PROVIDE JOBS TO PEOPLE AND CONTRIBUTE TO THE WEALTH OF THE COUNTRY, e.g. REDUCING UNEMPLOYMENT

Question 12

EXPLAIN HOW BUSINESSES RESPOND TO THE NEEDS OF THE COMMUNITY

Answer 12

• BUSINESSES PROVIDE GOODS AND SERVICES TO SATISFY THE BASIC NEEDS OF A COMMUNITY
• BUSINESSES OFTEN INVEST IN RESEARCH AND TECHNOLOGY TO KEEP TRACK WITH THE CHANGES IN THE ECONOMY AND ENABLE THEM TO THE CHANGING OF CONSUMER COMMANDS
• THROUGH THEIR OPERATIONS, BUSINESSES CREATE AND PROVIDE EMPLOYMENT OPPORTUNITIES FOR COMMUNTIY
• BUSINESSES ALSO PLOUGH BACK INTO THE COMMUNITY BY PROVIDING SPONSORSHIPS IN THE FORM OF STUDYING BUSINESSES, CONTRIBUTING TO CHARITY ORGANISATIONS, CHURCHES AND SO ON
• HELPS TO RAISE THE STANDARD OF LIVING IN THE COMMUNITIES, WHICH THEY OPERATE

Question 13

LIST 4 BASIC TYPES OF BUSINESSES

Answer 13

-MANUFACTURING BUSINESSES
-WHOLESALERS
-RETAILERS
-SERVICE BUSINESSES

Question 14

DESCRIBE MANUFACTURING BUSINESSES

Answer 14

-MANUFACTURING BUISNESSES ARE INVOLVED IN THE TRANSFORMATION OF RAW MATERIALS INTO GOODS, e.g. WOOD BEING MADE INTO FURNITURE, STEEL BEING MADE INTO CARS

Question 15

DESCRIBE WHOLESALERS

Answer 15

BUY FROM THE MANUFACTURER AND SELL GOODS TO RETAILERS. THEY BUY IN BULK QUANTITIES FROM THE MANUFACTURERS AND SELL IN SMALLER QUANTITIES TO THE RETAILERS

Question 15

DESCRIBE RETAILERS

Answer 15

BUY FROM THE WHOLESALERS AND SELL GOODS TO THE CONSUMERS. THEY BUY IN BULK QUANTITIES FROM THE WHOLESALERS AND SELL IN SMALL QUANTITIES TO THE CONSUMERS.

Question 16

DESCRIBE SERVICE BUSINESS

Answer 16

INVOLVES THE SUPPLY OF SERVICES TO CONSUMERS AND BUSINESSES.

Question 17

DESCRIBE AND EXPLAIN THE ROLE OF THE GOVERNMENT IN THE ECONOMY

Answer 17

• THE STATE MAY PLAY A MAJOR ROLE IN THE CONTROL OF ECONOMIC ACTIVITY THROUGH ECONOMIC POLICIES AND GENERAL LEGISLATION WITH REGARD TO ECONOMIC ACTIVITIES
• THROUGH FISCAL POLICY, THE STATE USES THE LEVEL OF TAXES AND GOVERNMENT EXPENDITURE TO INFLUENCE THE COUNTRY’S ECONOMIC ACTIVITY

-THE STATE STRIVES TOWARDS AN EQUAL DISTRIBUTION OF INCOME AND WEALTH IN THE COUNTRY AND MAY ALSO ACHIEVE THIS THROUGH TAXATION AND WELFARE PAYMENTS

Question 18

DISTINGUISH BETWEEN MARKET, MIXED AND PLANNED ENCONOMIES WITH REFERENCE TO CHARACTERISTIC, ADVANTAGES AND DISADVANTAGES

Answer 18

IN MARKET ECONOMIES ALL RESOURCES ARE OWNED PRIVATELY, WHILE IN PLANNED ECONOMIES, ALL RESOURCES ARE OWNED BY THE STATE

IN MARKET ECONOMIES, THERE IS NO CONTROL OVER LAND, CAPITAL AND LABOUR, WHILE IN PLANNED ECONOMIES, THE STATE CONTROLS THE LABOUR FORCE, CAPITAL AND LAND

IN MARKET ECONOMIES, FIRMS PRODUCE GOODS TO MAKE A PROFIT, WHILE IN PLANNED ECONOMIES, THERE IS NO PROFIT MOTIVE IN THIS SYSTEM

IN MIXED ECONOMIES, COMBINES SOME FEATURES FROM MARKET ECONOMY AND PLANNED ECONOMY

Question 19

NAME THREE CHARACTERISTICS OF A MARKET (FREE) ECONOMY

Answer 19

-ALL RESOURCES ARE OWNED PRIVATELY AND THERE IS NO GOVERNEMNT CONTROL OVER LAND, CAPITAL AND LABOUR

• BUSINESSES PRODUCE GOODS AND SERVICES TO MAKE A PROFIT
• THE CONSUMERS CHOOSE WHICH GOODS AND SERVICES THEY WANT TO BUY

> THE PRODUCERS DECIDE WHAT THEY’RE GOING TO SUPPLY TO PRODUCE

Question 20

NAME THREE ADVANTAGES OF A MARKET OR FREE ECONOMY

Answer 20

-INDIVIDUALS ARE FREE TO SETUP ANY LEGAL BUSINESS

-CONSUMERS CAN CHOOSE FREELY FROMA WIDE VARIETY OF GOODS AND SERVICES AVAILABLE, AS LONG AS THEY CAN PAY FOR IT

-WORKERS ARE MOTIVATED TO WORK FOR THEMSELVES. THE POSSIBILITY OF LOSING ONES JOB IS A STRONG MOTIVATOR

> PROFIT MADE IS A BIG ENCOURAGEMENT FOR SETTING UP NEW BUSINESES

Question 21

DISADVANTAGES OF MARKET OR FREE ECONOMY

Answer 21

• THERE IS UNCERTAINTY IN THE BUSINESS ENVIRONMENT
• GROWING SOCIAL AND ECONOMIC INEQUALITY MAY OCCUR. RICH BECOME RICHER, POOR BECOME POORER
• PRIVATE FIRMS IGNORE NEGATIVE EXTERNALITIES (WATER, AIR, NOISE POLLUTION AND ROAD CONDITIONS) AND WASTAGE OF RESOURCES

->EXPLOITATION OF WORKERS MAY TAKE PLACE. THE HARDER AND FASTER AND LONGER AN EMPLOYEE WORKS, THE LESS THEY GET PAID AND THE MORE THE PROFIT EARNED GOES TO THE EMPLOYER

Question 22

NAME THREE CHARACTERISTICS OF A PLANNED OR COMMAND ECONOMY

Answer 22

• THE GOVERNMENT OR STATE PLANS AND CONTROLS THE USE OF ECONOMIC AND OTHER RESOURCES

-NO PROVATE PROPERTY AT ALL

• CENTRAL GOVERNMENT DECIDES WHAT OS TO BE PRODUCED WHEN AND IN WHAT QUANTITIES

> THE CHOICE OF CONSUMERS WITH REGARD TO GOODS AND SERVICES ARE LIMITED

> NO PROFIT MOTIVE IN COMMAND ECONOMIES

Question 23

ADVANTAGES OF A PLANNED OR COMMAND ECONOMY

Answer 23

• GOVERNEMTN CONTROL ELIMINATES ANY WASTE REULTING FROM COMPETITION BETWEEN FRIMS
• THERE WILL BE WORK FOR EVERYBNODY
• BASIC NEEDS OF THE POPULSATION ARE MET, THUS PREVENTING THE PFRODUCTION OF ILLEGAL AND UNDESIRED PRODUCTS

-THE ECONOMY IS VERY STABLE, SO THERE ARE NO FLUCTUATIONS (DEPRESSIONS)

Question 25

DISADVANTAGES OF PLANNED OR COMMAND ECONOMY

Answer 25

-THIS IS LESS INCENTIVE TO WORK, AS THE GOVERNEMTN FIXES WAGES -PRIVATE PROPERTY ISNT ALLOWED AND VERY LITTLE FREEDOM OF CHOICE WITH REGARD TO CAREER OPPORTUTINITIES -THE LACK OF PROFIT MOTIVE FOR FIRMS LEADS TO LOW EFFICIENCY - THERE IS LITTLE REASON FOR INNOVATION OR MAINTAINING A HIGH QUALITY OF WORK

Question 26

NAME TWO CHARACTERISTICS OF A MIXED ECONOMY

Answer 26

- COMBINES CHARACTERISTICS FROM BOTH A FREE MARKET ECONOMY AND A COMMAND ECONOMY - CONSISTS OF THE PRIVATE SECTOR, WHICH INCLUDES ALL ECONOMIC ACTIVITY UNDER THE CONTROL OF THE STATE

Question 27

DISCUSS CHANGING IN AN ECONOMIC SYSTEM

Answer 27

> THE CENTRAL GOVERNMENT MAY MOVE AWAY FROM A FREE MARKET ECONOMY IN VARIOUS WAYS; -GOVERNMENT MAY SUPPLY CERTAIN GOODS OR SERVICES DIRECTLY TO CONSUMERS. MEDICINES AND EDUCATION ARE EXAMPLES WHERE GOVERNMENT MAY FEEL THAT THE SERVICES ARE TOO IMPORTANT TO BE LEFT TO THE FREE MARKET, OR WHERE MARKET PRICES ARE TOO HIGH FOR CONSUMERS IN THE LOW-INCOME LEVELS -THROUGH TAXATION POLICIES, GOVERNMENT MAY DISCOURAGE THE CONSUNMPTION AND THEREFORE THE PRODUCTION OF SOME GOODS SUCH AS CIGARETTES AND ALCOHOL -GOVERNEMNT MAHY ESTABLISH SPECIAL INSTITUTIONS TO SUPPLY SOME BASIC GOODS OR SERVICES, FOR EXAMPLE POSTAL SERVICES. THESE ENTITIES ARE NOT REQUIRED TO MAKE A PROFIT

Question 28

WHAT IS DIVISION OF LABOUR

Answer 28

- IT IS WHEN THE PRODUCTION PROCESS IS SPLIT UP INTO DIFFERENT TASKS AND EACH WORKER PERFORMS ONE OF THESE TASKS

Question 29

ADVANTAGES OF DIVISION OF LABOUR

Answer 29

-BUSINESS CAN USE SPECIALISED MACHINERY AND REDUCE COSTS - BUSINESS USING SPECIALISED MACHINES CAN INCREASE OUTPUT - PEOPLE CAN LEARN HOW TO DO THEIR JOBS MORE QUICKLY -TIME IS SAVED WHEN PEOPLE DONT HAVE TO MOVE FROM ONE JOB TO ANOTHER

Question 30

DISADVANTAGES OF DIVISION OF LABOUR

Answer 30

-JOBS WILL BE BORING AND MONOTONUS - THERE MAY BE A LOSS OF CRAFT SKILLS - SPECIALISED WORKERS WILL FIND IT HARD TO CHANGE JOBS IF THEY BECOME UNEMPLOYED

Question 31

WHAT IS SPECIALISATION

Answer 31

- IT IS THE PROCESS BY WHICH YOU DO A JOB THAT YOU'RE GOOD AT, ALLOWING YOU TO CONCENTRATE ON ONE PART OF THE PRODUCTION PROCESS, LEAVING OTHER JOBS TO OTHER PEOPLE

Question 32

ADVANTAGES OF SPECIALISATION

Answer 32

-SPECIALISED LABOUR IS ABLE TO CONCENTRATE ON ONE TASK -OUTPUT IS LIKELY TO RISE AS SPECIALISATION LEADS TO FAST OUTPUT -MORE JOB SATISFACTION BECAUSE WORKERS ARE DOING WHAT THEY'RE GOOD AT -SPECIALISED WORKERS BECOME QUICKER IN PRODUCING GOODS AND SERVICES

Question 33

DISADVANTAGES OF SPECIALISATION

Answer 33

- SPECIALISATION CAN PRESENT A PROBLEM WHERE ON STAGE OF THE PRODUCTION IS DEPENDENT UPON ANOTHER -SPECIALISATION MAY LEAD TO WORKERS BECOMING MORE THAN MACHINE OPERATORS. THIS COULD LEAD TO LOSS OF SKILLS - TEDIOUS AND REPETITION WORK MAY LEAD TO DEMOTIVATE WORKERS -A STRIKE BY ONE WORKER MAY EFFECT THE OTHER GROUP OF WORKERS

Question 34

IDENTIFY THE LEVELS OF SPECIALISATION WITH EXAMPLES

Answer 34

>INTERNATIONAL SPECIALISATION - REFERS TO SPECIALISATION ACROSS THE BORDERS OF THE COUNTRY -THESE COUNTRIES, THEREFORE SPECIALISE IN THE PRODUCTION OF THESE GOODS AND SERVICES IN WHICH THEY ARE MORE EFFICIENT THAN OTHER COUNTRIES; THEY HAVE A COMPETITIVE ADVANTAGE IN THE PRODUCTION OF THOSE SPECIFIC PRODUCTS >REGIONAL SPECIALISATION - IT OCCURS WHEN SPECIFIC REGIONS CONCENTRATE ON SPECIFIC ACTIVITIES DEPENDING ON THE AVAILABILITY OF NATURAL RESOURCES, CLIMATE CONDITIONS, CAPITAL INVESTMENTS, SKILLED OR CHEAP LABOUR AND SO ON. >> NORTHERN NAMIB AND MAIZE >INDUSTRIAL SPECIALISATION - DIFFERENT INDUSTRIES SPECIALISE IN THE PRODUCTION OF A PARTICULAR PRODUCT OR RANGE OF RELATED PRODUCTS BECAUSE THEY HAVE AN ADVANTAGE OVER OTHER CONUTRIES REGARDING RESEARCH AND EXPERIENCE IN THE SPECIFIC FIELDS, SUFFICIENT SUPPLY OF SKILLED LABOUR AND CAPITAL >SPECIALISATION BETWEEEN BUSINESS CONCERNS - THESE TYPES OF SPECIALISATION OCUR WITHIN AN INDUSTRY. DIFFERENT BUSINESSES WITHIN AN INDUSTRY WILL SPECIALISE IN THE PRODUCTION OF ONE PARTICULAR PRODUCT OR RANGE OF PRODUCTS >> MOTOR INDUSTRY, BUSNIESSES DEAL WITH TYRES WHILE OTHERS DEAL WITH THE ENGINE PARTS OF A CAR

Question 35

EXAMPLES OF THE CONFLICT OF OBJECTIVES BETWEEN THE VARIOUS GROUPS OF STAKEHOLDERS

Answer 35

>MANAGERS MAIN INTEREST: - SALARY, SHARE OPTIONS AND COMPANY SUSTAINABILITY CONFLICT: - WITH EMPLOYEES OVER SALARIES > OWNERS MAIN INTERST: - PROFITS GROWTH, WEALTH CONFLICT: - WITH MANAGERS AND EMPLOYEES OVER DECISIONS TO REINVEST IN PROFITS INTO THE BUSINESS > EMPLOYEES MAIN INTEREST: - SALARIES, JOB SATISFACTION AND JOB SECURITY CONFLICT: - WITH OWNERS AND MANAGERS OVER THE SALARY INCREASES. THEY WANT THE PROFITS TO BE INESTED IN THE WORKERS' SALARIES >COMMUNITY MAIN INTEREST: - LOCAL JOBS, CLEAN ENVIRONMENT SPONSORSHIPS CONFLICT: - CAN EXIST BETWEEN OWNERS AND MANAGERS OVER POLLUTION, RELOCATION TO OTHER MARKETS, CHANGE OF SUPPLIERS THAT AFFECT LOCAL JOBS >GOVERNEMNT MAIN INTEREST: - PAYMENT OF TAXES, ENSURE LEGAL WORKING PRACTICES CONFLICT: -WITH OWNER ON TAX INCREASES AND ENFORCEMENT ON SPECIFIC ISSUES >INVESTORS / FINCANCERS MAIN INTEREST: - BUSINESS GROWTH INTEREST ON INVESTMENT, REPAYMENTS OF LOANS AND INTERST ON LOAN CONFLICT: -MAY BE WITH MANAGERS AND OWNERS OVER THE LEVEL OF RISK TAKEN IN BUSINESS DECISIONS >SUPPLIERS MAIN INTEREST: - RELIABLE AND PROMPT PAYMENT, LONG-TERM CONTRACT CONFLICT: - MAY BE WITH MANAGEMENT OVER LENGTH THEY HAVE TO WAIT FOR PAYMENT

Question 36

DEFINE A STAKEHOLDER

Answer 36

- REFERS TO SOMEONE WITH INETERST IN THE BUSINESS ORGANISATION

Question 37

NAME EACH STAKEHOLDER AND STATE THEIR OBJECTIVES

Answer 37

> EMPLOYEES/ WORKERS - A GOOD SALARY - JOB SATISFACTON, GOOD WORKING CONDITIONS, JOB SECURITY AND FINGE BENEFITS >MANAGERS -THEY STRIVE FOR GOOD SALARIES AND FINGE BENEFITS - SUCCESS OF THE BUSINESS; CAN ENSURE HIGHER SALARIES AND SHARING IMPORTANT AND BETTER FINGE BENEFITS -STATUS AND POWER; IMPORTANT DRIVING FORCES >OWNERS -HIGHER PROFITS - BEST RETURNS AS POSSIBLE ON INVESTMENTS/ DIVIDENTS -STRIVE TOWARDS THE RENDERING OF QUALITY SERVICE TO CUSTOMERS > CUSTOMERS / CONSUMERS - DEMAND VALUE OF THEIR MONEY - WANT A WIDE RANGE OF PRODUCTS > COMMUNITY / SOCIETY - JOB CREATION AND IMPROVEMENT OF INFRASTRUCTURE -PREVENTION OF CRIME, POLLUTION AND AVOIDING DESTRUCTIONS OF NATURAL BEAUTY OF THE ENVIRONMENT >GOVERNMENT - SUCCESS OF THE BUSINESS IN THE COUNTRY; CAN EMPLOY MORE WORKERS -REDUCE UNEMPLOYMENT RATE AND INCREASE INCOME EARNED BY THE GOVERNMENT IN THE FORM OF TAXATION THE BUSINESS AND EMPLOYEES PAY >INVESTORS / FINANCERS - HOW SECURE THEIR FINANCIAL INTEREST IN THEIR BUSINESS - TO BE SURE THAT LOANS MADE TO BUSINESSES ARE SECURED AS WELL AS THE RETURNS EXPECTED - FOR THEM TO GET FRUITFUL INTEREST RATE

Question 38

DEFINE DIVIDENTS

Answer 38

-PAYMENTS MADE TO STAKEHOLDERS FOR INVESTING IN THE COMPANY

Question 39

REASON WHY CONTRIES TRADE WITH ONE ANOTHER

Answer 39

-SOME CONUTRIES PRODUCE GOODS AND SERVICES THAT OTHER CONUTRIES CAN'T PRODUCE, THERFORE COUNTRIES TRADE AND IMPORT PRODUCTS THAT THEY CAN'T PRODUCE/ THAT THEYC AN'T PRODUCE IN LARGE QUANTITIES -SOME COTUNRIES PRODUCE GOODS AND SERVICES AT A LOWER COST THAN OTHER COUNTRIES; IT IS CHEAPER TO IMPORT IT THAN TO GO TO THE GREATER EXPENSE OF PRODUCING IT -CONUTRIES WITH CAPITAL AND A FEW WORKERS SPECIALISE IN THE PRIDCUTINO OF GOODS THAT REQUIRE CAPITAL AND TRADE WITH PRODUCTS THAT ARE LABOUR INTENSIVE. GOODA WITH INPUTS THAT ARE LOCALLY AVAILABLE SPECIALISE INT HESE GOODS AND TRADE WITH GOODS THAT ARE LESS SALEABLE

Question 40

STATE THE GROUPS INVOLVED IN BUSINESS ACTIVITY

Answer 40

- EMPLOYEES / WORKERS - MANAGERS - OWNERS - CUSTOMERS / CONSUMERS - COMMUNITY - GOVERNMENT - COMMUNITY - SUPPLIERS - INVESTORS / FINANCERS

Question 40

DESCRIBE THE RELATIONSHIP BETWEEN SPECIALISATION AND TRADE

Answer 40

- THE TENDECNY OF COUNTRIES TO SPECIALISE IN CERTAIN PRODCUTS WHICH THEY TRADE FOR OTHER GOODS OR MONEY RATHER THAN PRODUCING ALL GOODS ON THEIR OWN