Summary Olevel/IGCSE Business Studies Chapter 1: Business Activity

BUSINESS STUDIES
SECTION 1
CHAPTER 1: BUSINESS ACTIVITY

ECONOMIC PROBLEM:
 Needs: A good or service essential for living
 Want: A good or service people would like to have but is not
necessary for living.
 People’s wants are infinite resulting in the creation of the
economic problem
 Economic problem: Unlimited wants but limited resources to
produce goods and services to satisfy these wants.
 Economic problem leads to creation of scarcity.

FACTORS OF PRODUCTION
 Scarcity is caused due to shortage of Factors of production
the produce goods and services the population needs and
wants
 Factors of production: Resources and input used to produce
goods and services. There are 4 factors of production which
are limited in supply.
1. Land: Natural resources provided by nature. Includes
surface of earth, forests, oil, minerals, gas, climate.
2. Labour: All human resources (people) available to
make the product.
3. Capital: All man-made resources available such as
machinery, equipment and even capital for
manufacturing.
4. Enterprise: The ability to take risks and run a business
venture. A person who has enterprise is called an
entrepreneur. Entrepreneur organize all other factors