Understanding Business Activity

A good or service essential for living

• needs

• wants

• factors of productioin

• scarcity

A good or service which people would like to have, but it is not essential for living.

• needs

• wants

• scarcity

• factors of production

lack of sufficient products to fulfill the total wants of the population

• economic problem

• scarcity

• factors of production

• needs

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity

• economic problem

• wants

• needs

• scarcity

Those resources needed to produce goods and services. There are 4 of them.

• Factors of production

• Opportunity cost

• Economic problem

• Scarcity

The next best alternative given up by choosing another item

• Opportunity cost

• Businesses

• Economic problem

• factors of production

When the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation

• Division of labour

• Specialisation

• Added value

• Businesses

Combine factors of production to make products (goods and services) which satisfy people’s wants

• Specialisation

• Division of labour

• Businesses

• Added value

The difference between the selling price of a product and the cost of bought-in materials and components

• Specialisation

• Businesses

• Added value

• Division of labour

Occurs when people and businesses concentrate on what they are best at

• Specialisation

• Division of labour

• Businesses

• Opportunity cost