Chapter 1 - Introduction to Business Activity

What is a need?

• A good or service essential for living

• A good or service which people would like to have

• A luxury item

• A non-essential item

Answer explanation

A need is a good or service essential for living.

What is the economic problem?

• Limited wants and unlimited resources

• Equal distribution of resources

• Unlimited resources to produce goods and services

• Unlimited wants and limited resources

Answer explanation

The economic problem arises from the fact that people have unlimited wants but limited resources to satisfy them. This creates scarcity and the need to make choices.

What does scarcity result from?

• Unlimited resources

• Limited resources

• Equal distribution of resources

• Unlimited production

Answer explanation

Scarcity results from limited wants, not unlimited resources, equal distribution of resources, or unlimited production.

What is opportunity cost?

• The cost of bought in materials and components

• The next best alternative given up by choosing another item

• The selling price of a product or service

• The cost of production

Answer explanation

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

What is specialization in the production process?

• The use of multiple skills in production

• The use of advanced technology

• The division of tasks among workers

• The production of a single type of product

Answer explanation

Specialization in the production process refers to the division of tasks among workers, where each worker focuses on a specific task. This increases efficiency and productivity.

What is the difference between the selling price and the cost of bought in materials and components?

• Value Added

• Cost

• Selling price

• Profit

Answer explanation

The difference between the selling price and the cost of materials and components is called profit.

How can a retailer create a luxury feel to the shop?

• By presenting items in attractive displays

• By offering discounts

• By reducing the variety of products

• By lowering the prices

Answer explanation

A retailer can create a luxury feel to the shop by presenting items in attractive displays.

What is a want in economics?

• A basic necessity

• A luxury item

• A good or service essential for living

• A non-essential item

Answer explanation

A want in economics refers to a non-essential item, such as a luxury item, which is not necessary for basic living.

The following jobs belong to the primary sector except:

• banking

• farming

• fishing

• forestry

Answer explanation

The next best alternative given up by choosing another item is called opportunity cost.

Reasons for Deindustrialization include

• Economy matures – people’s incomes increase

• Demand for services increases

• Technological advancement

• There is no one to work at primary sector business