Business Studies (Chapter 1 and 2)

Need - good or service that is essential for living

Want - good or service desired by people

economic problem - results t=from the unlimtied wants and limtited resources

scarcity - lack of sufficient products to fulfill to the total population

opportunity cost - next best alternative 

The real cause of the economic problem

Few factors of production, there are only a limtied number of these, as there is never enough land, labout, capital or entrperenuers to produce allo the unlimtied needs and wants of a population. Therefore choice is neccesary, we have to decide which wants we want satisfied and which ones we are willing to let go. 

business - combines factors of production to make products which satisfy people's wants.

Business activity - 

• combines scarce factors of production in order to produce goods and services
• Produces those goods and services whcih are needed to satisfy the wants of the population
• employs workers and pay them wages to allow them to consume products made by other people, and in turn make products for others to satisfy their wants. 

To make a profit - when owned by private individuals, there main aim is to make money for themselves so that they can purchase goods or servies to satisfy their wants.

To increase added value - to make the product or service more appealing to the customer without extra cost, thereofre being able to increase the selling price.

To expand the business - makes jobs more secure, increase salaries and staus of managers, open up new possibilities and spread risks, obtain higher market share and to obtain cost advantages(economies of scale)

To achieve business surivial - to maintain their firm, which could be threatened by recession or new competitors. Doing this may decrease profit levels, but will in turn aid their survival.

To provide a service - non-profit organisations, and the government want to help there customers by providing a service.

Owners -