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Page 1

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Chapter 1
The purpose of Business Activity
The economics problem: needs and wants.
Basically, all humans have needs and wants. Needs are things we can't live without, while wants are simply our desires that
we can live without. We all have unlimited wants, which is true, since all of us…

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Advantages:

Specialized workers are good at one task and increases efficiency and output.
Less time is wasted switching jobs by the individual.
Machinery also helps all jobs and can be operated 24/7.
Disadvantages

Boredom from doing the same job lowers efficiency.
No flexibility because workers can only do one job…

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4. Survival: If a business do not survive, its owners lose everything. Therefore, businesses need to focus on this
objective the most when they are: starting up, competing with other businesses, or in an economic recession.
5. Service to the community: This is the primary goal for most government owned…

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4 Sir Muhammad Talha

Page 5

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Chapter 2

Types of business activity
Levels of economic activity
In order for products to be made and sold to the people, it must undergo 3 different production processes. Each process is
done by a different business sector and they are:

Primary sector: The natural resources extraction sector. E.g. farming,…

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Low incentive for firms (no profit) leads to low efficiency
Mixed economy:
Businesses belong to both the private and public sector. Government controls part of the economy.

Industries under government ownership:

health
education
defence
public transport
water & electricity
Privatisation
Privatisation involves the government selling national businesses to the private…

Page 7

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Internal Growth: Organic growth. Growth paid for by owners capital or retained profits.
External Growth: Growth by taking over or merging with another business.
Types of Mergers (and main benefits):

- Horizontal Merger: merging with a business in the same business sector.

Reduces no. of competitors in industry
Economies of…

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8 Sir Muhammad Talha

Page 9

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Chapter 3

Forms of business organisation
Almost every country consists of two business sectors, the private sector and the public sector. Private sector businesses
are operated and run by individuals, while public sector businesses are operated by the government. The types of
businesses present in a sector can vary, so…

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Partnership
A partnership is a group consisting of 2 to 20 people who run and own a business together. They require a Deed of
Partnership or Partnership Agreement, which is a document that states that all partners agree to work with each other,
and issues such as who put the…

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