Unit 1: Business Activity

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.

Goods: products which are sold to the consumer, they can be seen and touched.

Services: non-tangible product and/or an activity of performing work for others.

Land: all natural resources such as minerals, ores, fields, oil, and forests.

Labour: is the number of people available to work.

Capital: machinery, equipment, and finance needed for the production of goods and services.

Enterprise: people prepared to take the risk of setting up businesses - they are known as entrepreneurs.

Economic Problem: unlimited wants cannot be met because there are limited factors of production. This creates scarcity.

Scarcity: there are not enough goods and services to meet the wants and needs 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.

Division of Labour: production is divided into separate tasks and each worker does just one of those tasks.

Capital Goods: Physical goods, such as machinery and delivery vehicles, used by other businesses to help produce other goods and services.

Branding: increases added value because people want to feel they should buy the item from this particular company.

Excellent Service Quality: providing high quality, personalised service, can be the difference between a high price or a low price.

Product Features: products that have more features and functions than similar products on the market will allow the producer to charge a higher price.

Convenience: consumers are often prepared to pay a higher for goods and services which they can have immediately.