Ch1 - Business activity

Business activity is the process of producing goods and services to satisfy consumer demand.

• True

• False

Which of the following is not a consumer need?

• Water

• Housing

• Car

• Food

Ali owns his own bakery. Ali makes all of the bread and cakes then sells them in his attached shop.

Which factor of production is NOT mentioned in the above scenario?

• Capital

• Labour

• Land

• Enterprise

Answer explanation

Capital is correct because the scenario does not mention Ali’s finance or the machinery and equipment he uses to make his bread and cakes. The scenario does mention land (it refers to the bakery), enterprise (Ali owns his own business so he is an entrepreneur) and labour (Ali makes the bread and cakes and sells them himself)

The benefit that could have been gained from an alternative use of the same resource’ is a definition of ...

• the economic problem

• production

• scarcity

• opportunity cost

Scarcity is the difference between unlimited consumer needs and limited factors of production.

• True

• False

Answer explanation

Scarcity is the difference between the goods and services produced by businesses, using all available resources, and the unlimited wants of consumers. This statement is false because scarcity is not concerned with the unlimited needs of consumers, but with their unlimited wants.

Increasing specialisation of factors of production makes businesses ...

• less profitable

• less efficient

• less productive

• more efficient

... goods are products that are sold to other businesses to help them in their production process.

Production is divided into separate tasks, each carried out by different employees.

• Scarcity

• Economic problem

• Specialisation

• Division of labour

There are not enough goods and services to satisfy consumer wants.

• Scarcity

• Economic problem

• Specialisation

• Division of labour

Businesses concentrate on what they are good at.

• Scarcity

• Economic problem

• Specialisation

• Division of labour