GG: SECTION 1: Understanding Business Activity

Front

What is a need?

Back

A need is a good or service essential for living.

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What is a want?

Back

A want is a good or service which people would like to have, but which is not essential for living. People's wants are unlimited.

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What is the Economic Problem?

Back

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity.

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What are Factors of Production?

Back

Factors of production are those resources needed to produce goods and services. There are four factors of production and they are in limited supply.

Front

What is scarcity?

Back

Scarcity is the lack of sufficient products to fulfill the total wants of the population.

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What is opportunity cost?

Back

Opportunity cost is the next best alternative given up by choosing another item.

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What is specialization?

Back

Specialization occurs when people and businesses concentrate on what they are best at.

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What is division of labour?

Back

Division of labour is when the production process is split up into different tasks and each worker performs one of those tasks. It is a form of specialization.

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How do businesses satisfy people's wants?

Back

Businesses combine the factors of production to make goods and services which satisfy people's wants.

Front

What is added value?

Back

Added value is the difference between the selling price and the cost of bought-in materials and components.