Understanding Business Activity

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  • Business Activity
    • The process of producing goods and services to satisfy consumer demand
      • Need: a good or service which is essential to living
      • Want: a good or service which people would like, but is not essential for living
        • Economic Problem: unlimited wants cannot be met because there are limited factors of production. This creates Scarcity.
          • Factors of production: the resources needed to produce goods and services - Land, Labour, Capital, Enterprise.
            • Enterprise: people prepared to take the risk of setting up businesses - they are known as entrepreneurs
            • Capital: machinery, equipment and finance needed for production of goods and services
              • Enterprise: people prepared to take the risk of setting up businesses - they are known as entrepreneurs
            • Labour: the number of people available to work
              • Capital: machinery, equipment and finance needed for production of goods and services
                • Division of Labour: production is divided into seperate tasks and each worker does just one of those taks.
              • Land: all natural resources such as minerals, ores, fields, oils and forests.
                • Labour: the number of people available to work
                  • Division of Labour: production is divided into seperate tasks and each worker does just one of those taks.
            • Scarcity: there are not enough goods and services to meet the wants of the population.
        • Consumer Goods: products which are sold to the final consumer. They can be seen and touched, for example computers and food.
        • Consumer Services: non tangible products such as insurance services, transport.
          • Consumer Goods: products which are sold to the final consumer. They can be seen and touched, for example computers and food.
        • Consumer Goods: physical goods, such as machinery and delivery vehicles, used by other businesses to help produce other goods and services
          • Consumer Services: non tangible products such as insurance services, transport.
        • Land: all natural resources such as minerals, ores, fields, oils and forests.
          • Scarcity: there are not enough goods and services to meet the wants of the population.
          • Opportunity Cost: the benefit that could have been gained from an alternative use of the same resource.
          • Specialisation: people and businesses concentrate on what they are best at

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