iGCSE Business - 1 Business Activity

Which of these is the best definition of the ‘economic problem’?

• People do not have enough money.
• There are not enough resources to satisfy people’s wants.
• There are too many factors of production.

Which of the following is NOT a factor of production?

• oil reserves

• factory buildings

• skilled labour

• music CDs

Division of labour can be defined as:

• Workers specialise on just one task and become better at it.
• Workers become specialist in all jobs.
• All firms only have one worker
• No workers are employed as machines always do all the work.

One of the drawbacks to division of labour is that:

• output and efficiency falls
• workers spend time on training to do several different jobs
• workers can become bored through concentrating on one job
• no machinery is used and this slows down production.

The difference between the selling price and the cost of materials and components that go into producing a product is called:

• Extra Pricing

• Added Value

• Specialization

• Opportunity Cost

Adding value can happen in several ways, such as:

• Buying better (but more expensive) raw materials

• Reducing the cost of materials but keeping the price the same

• Reducing the selling price even though costs remain the same

• Increasing the selling price as the cost of materials rise

The factors of production are the following, EXCEPT:

• Capital

• Expertise

• Land

• Labour

The main objective of a newly formed business is most likely to be:

• survival
• maximum profit
• rapid growth
• providing a service to the community