Unit 1: Understanding Business Activity

What are needs in the context of business activity?

• Essential requirements for operation and growth

• Optional desires for luxury and comfort

• Unnecessary expenses

• Irrelevant factors

Define 'scarcity' in economic terms.

• Scarcity refers to the limited nature of society's resources.

• Scarcity is the abundance of resources in an economy.

• Scarcity is the unlimited availability of resources.

• Scarcity is the economic term for surplus.

List the factors of production

• Land, Labor, Capital, Entrepreneurship

• Land, Labor, Money, Management

• Resources, Labor, Capital, Innovation

• Land, Workforce, Capital, Technology

What is the formula for calculating added value?

• Selling Price - Cost Price

• Cost Price + Profit

• Selling Price + Cost Price

• Profit - Cost Price

Which sector uses the earth's natural resources to produce raw materials for other businesses?

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What is the importance of specialization in business?

• It allows businesses to focus on their core competencies and improve efficiency.

• It leads to a decrease in product quality.

• It increases the number of employees needed.

• It reduces the need for market research.

What are the advantages of specialization according to the text?

• Increased efficiency and productivity

• Decreased quality of work

• Higher costs

• Reduced innovation

A mixed economy is a type of economic system that combines elements of both capitalism and socialism. What is a mixed economy?

• An economic system combining capitalism and socialism

• An economic system based solely on capitalism

• An economic system based solely on socialism

• An economic system with no government intervention

List two arguments for privatisation.

• Increased efficiency and competition

• Higher taxes and government control

• Decreased quality of services

• Reduced foreign investment

Which of the following are arguments against privatisation?

• It can lead to a loss of public accountability.

• It may result in higher prices for consumers.

• It encourages monopolistic practices.

• It ensures better quality of services.