What is division of labour?

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.

How do businesses satisfy people's wants?

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

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

What is the primary sector of industry?

The primary sector of industry extracts and uses the natural resources of Earth to produce raw materials used by other businesses.

What is the secondary sector of industry?

The secondary sector of industry manufactures goods using the raw materials provided by the primary sector.

What is the tertiary sector of industry?

The tertiary sector of industry provides services to consumers and other sectors of industry.

What is de-industrialisation?

De-industrialisation occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.

What is a mixed economy?

A mixed economy has both a private sector and a public (state) sector.

Capital is the money invested into the business by the owners.

Who is an entrepreneur?

An entrepreneur is a person who organises, operates and takes the risk for a new business venture.

What is capital employed?

Capital employed is the total value of capital used in the business.

What is internal growth?

Internal Growth occurs when a business expands its existing operations.

What is external growth?

External Growth is when a business takes over or merges with another business. It is often called integration as one business is integrated into another one.

What is a takeover or acquisition?

A takeover or acquisition is when one business buys out the owners of another business, which then becomes part of the 'predator' business.

A merger is when the owners of two businesses agree to join their businesses together to make one business.

What is horizontal integration?

Horizontal integration is when one business merges with or takes over another one in the same industry at the same stage of production.

What is vertical integration?

Vertical integration is when one business merges with or takes over another one in the same industry but at a different stage of production. Vertical integration can be forward or backward.

What is conglomerate integration?

Conglomerate integration is when one business merges with or takes over a business in a completely different industry. This is also known as diversification.

What is a sole trader?

A sole trader is a business owned by one person.

What is limited liability?

Limited liability means that the liability of shareholders in a company is limited to only the amount they invested.

What is unlimited liability?

Unlimited liability means that the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.

What is a partnership?

A partnership is a form of business in which two or more people agree to jointly own a business.

What is an unincorporated business?

An unincorporated business is one that does not have a separate legal identity. Sole traders and partnerships are unincorporated businesses.

What are incorporated businesses?

Incorporated businesses are companies that have separate legal status from their owners.

Who are shareholders?

Shareholders are the owners of a limited company. They buy shares which represent part-ownership of the company.

What are private limited companies?

Private limited companies are businesses owned by shareholders but they cannot sell shares to the public.

What are public limited companies?

Public limited companies are businesses owned by shareholders but they can sell shares to the public and their shares are tradable on the Stock Exchange.

Dividends are payments made to shareholders from the profits [after tax] of a company. They are the returns to shareholders for investing in the company.

A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business from the franchisor.

What is a joint venture?

A joint venture is where two or more businesses start a new project together, sharing capital, risks and profits.

What is a public corporation?

A public corporation is a business in the public sector that is owned and controlled by the state [government].

What are business objectives?

Business objectives are the aims or targets that a business works towards.

Profit is total income of a business [revenue] minus total costs.

What is market share?

Market share is the percentage of total market sales held by one brand or business.

What is a social enterprise?

A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business.

What is a stakeholder?

A stakeholder is any person or group with direct interest in the performance and activities of a business.

What is a private limited company?

A private limited company is a business owned by shareholders, but its shares are not available to the public and are not traded on the Stock Exchange.

What is vertical integration?

Vertical integration is when one business merges with or takes over another business in the same industry but at a different stage of production.

What is a cooperative?

A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit. Members share profits and decision-making responsibilities.

What is a business plan?

A business plan is a detailed document outlining the objectives, strategies, financial forecasts, and market analysis for a business.

What is market research?

Market research is the process of gathering, analyzing, and interpreting information about a market, including information about the target market and customers.

A merger is when two businesses agree to join together to form a new, larger business.

What is a joint venture?

A joint venture is a business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task, which can be a new project or any other business activity.

A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business's (franchisor) proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business's name.

GG: SECTION 1: Understanding Business Activity Flashcards

Student preview

61 questions

Show all answers

1.

FLASHCARD QUESTION

Front

What is a need?

Back

A need is a good or service essential for living.

2.

FLASHCARD QUESTION

Front

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.

3.

FLASHCARD QUESTION

Front

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.

4.

FLASHCARD QUESTION

Front

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.

5.

FLASHCARD QUESTION

Front

What is scarcity?

Back

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

6.

FLASHCARD QUESTION

Front

What is opportunity cost?

Back

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

7.

FLASHCARD QUESTION

Front

What is specialization?

Back

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

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