IGCSE Business Studies G1-Chapter 1: Business Activity

Land

All natural resources provided by nature

Businesses

Combine factors of production to make products which satisfy people's wants (The purpose of business activity) Features: 1.combines scare factors 2.produce goods and services 3.employs people

Need

Goods or services essential for living

Want

Goods or services which people would like to have, but which is not essential for living (Unlimited)

Specialization

People and businesses concentrate on what they are best at Advantages: 1.workers are trained in one task and specialize in this - higher efficiency and output 2.less time is wasted moving from one workbench to another Disadvantages: 1.workers can become bored doing just one job - efficiency might fall 2.if one worker is absent and no one else can do the job, the production might be stopped

Factor of production

Resources needed to produce goods or services

Enterprise

Skill and risk-taking ability of the person who brings the other resources or factors of production to produce a good or service

Added value

The difference between selling price of a product and the cost of bought in aw materials and components

Capital

The finance, machinery and equipments needed for manufacture

Scarcity

The lack of sufficient products to fulfill the total wants of the population

Opportunity cost

The next best alternative given up by choosing another item

Labour

The number of people available to make products

Division of labour

The production process is split up into different tasks and each worker performs one of these tasks. (A form of specialization)

Economic problem

There exist unlimited wants but limited resources to produce the goods or services to satisfy those wants. (Scarcity)

Entrepreneurs

the people who bring the other resources or factors of production to produce goods or services