Cambridge IGCSE Business Studies Key
Terms
CHAPTER 1 - BUSINESS ACTIVITY - ANS
Business - ANS An organisation which produces goods and services.
Need - ANS A need is a good or service essential for living.
Want - ANS A want is a good or service which people would like to have, but which is not essential for
living. People's wants are unlimited.
Economic problem - ANS There exist unlimited wants but limited resources to produce the goods and
services to satisfy those wants, this creates scarcity.
Scarcity - ANS Scarcity is the lack of sufficient products to fulfill the total wants of the population.
Factors of production - ANS Factors of production are those resources needed to produce goods or
services. There are four factors of production and they are in limited supply.
(factor of production) Land - ANS Land is the term used to cover all of the natural resources provided by
nature and includes fields, forests, oil, gas, metals and other resources.
(factor of production) Labour - ANS Labour is the term used to describe the number of people available
to make products.
(factor of production) Capital - ANS Capital is the finance, machinery and equipment needed for the
manufacture of goods.
,(factor of production) Enterprise - ANS Enterprise is the skill, and risk-taking ability of the person who
brings the factors of production together to produce a good or a service. For example, the owner of a
business. These people are called entrepreneurs.
Opportunity cost - ANS Opportunity cost is the next best alternative given up by choosing another item.
Specialisation - ANS Specialisation occurs when people and businesses concentrate on what they are
best at.
Division of labour - ANS Division of labour is when the production process is split up into different tasks
and each worker performs one of these tasks. It is a form of specialisation.
Added value - ANS Added value is the difference between the selling price of a product and the cost of
bought in materials and components.
CHAPTER 2 - CLASSIFICATION OF BUSINESS - ANS
Primary sector - ANS The primary sector of industry extracts and uses the natural resources of the earth
to produce raw materials used by other businesses
Secondary sector - ANS The secondary sector of industry manufactures goods using raw materials
provided by the primary sector.
Tertiary sector - ANS The tertiary sector of industry provides services to consumers and the other
sectors of industry.
De-industrialisation - ANS De-industrialisation occurs when there is a decline in the importance of the
secondary, manufacturing sector of industry in a country.
, Mixed economy - ANS A mixed economy has both a private sector and a public sector.
Private sector - ANS Businesses not owned by the government.
Public sector - ANS Government owned and controlled businesses and organisations.
CHAPTER 3 - ENTERPRISE, BUSINESS GROWTH AND SIZE - ANS
Entrepreneur - ANS An entrepreneur is a person who organises, operates and takes the risk for a new
business venture.
Business plan - ANS A business plan is a document containing the business objectives and important
details about the operations, finance and owners of the new business.
Value - ANS How much something is worth.
Business size - ANS Measured by: number of employees; value of output; value of sales; value of capital
employed.
Capital employed - ANS Capital employed is the total value of capital used in the business.
Internal growth - ANS Internal growth occurs when a business expands its existing operations.
External growth - ANS External growth is when a business takes over or merges with another business.
Integration - ANS Integration is when one firm is integrated into another one.
Terms
CHAPTER 1 - BUSINESS ACTIVITY - ANS
Business - ANS An organisation which produces goods and services.
Need - ANS A need is a good or service essential for living.
Want - ANS A want is a good or service which people would like to have, but which is not essential for
living. People's wants are unlimited.
Economic problem - ANS There exist unlimited wants but limited resources to produce the goods and
services to satisfy those wants, this creates scarcity.
Scarcity - ANS Scarcity is the lack of sufficient products to fulfill the total wants of the population.
Factors of production - ANS Factors of production are those resources needed to produce goods or
services. There are four factors of production and they are in limited supply.
(factor of production) Land - ANS Land is the term used to cover all of the natural resources provided by
nature and includes fields, forests, oil, gas, metals and other resources.
(factor of production) Labour - ANS Labour is the term used to describe the number of people available
to make products.
(factor of production) Capital - ANS Capital is the finance, machinery and equipment needed for the
manufacture of goods.
,(factor of production) Enterprise - ANS Enterprise is the skill, and risk-taking ability of the person who
brings the factors of production together to produce a good or a service. For example, the owner of a
business. These people are called entrepreneurs.
Opportunity cost - ANS Opportunity cost is the next best alternative given up by choosing another item.
Specialisation - ANS Specialisation occurs when people and businesses concentrate on what they are
best at.
Division of labour - ANS Division of labour is when the production process is split up into different tasks
and each worker performs one of these tasks. It is a form of specialisation.
Added value - ANS Added value is the difference between the selling price of a product and the cost of
bought in materials and components.
CHAPTER 2 - CLASSIFICATION OF BUSINESS - ANS
Primary sector - ANS The primary sector of industry extracts and uses the natural resources of the earth
to produce raw materials used by other businesses
Secondary sector - ANS The secondary sector of industry manufactures goods using raw materials
provided by the primary sector.
Tertiary sector - ANS The tertiary sector of industry provides services to consumers and the other
sectors of industry.
De-industrialisation - ANS De-industrialisation occurs when there is a decline in the importance of the
secondary, manufacturing sector of industry in a country.
, Mixed economy - ANS A mixed economy has both a private sector and a public sector.
Private sector - ANS Businesses not owned by the government.
Public sector - ANS Government owned and controlled businesses and organisations.
CHAPTER 3 - ENTERPRISE, BUSINESS GROWTH AND SIZE - ANS
Entrepreneur - ANS An entrepreneur is a person who organises, operates and takes the risk for a new
business venture.
Business plan - ANS A business plan is a document containing the business objectives and important
details about the operations, finance and owners of the new business.
Value - ANS How much something is worth.
Business size - ANS Measured by: number of employees; value of output; value of sales; value of capital
employed.
Capital employed - ANS Capital employed is the total value of capital used in the business.
Internal growth - ANS Internal growth occurs when a business expands its existing operations.
External growth - ANS External growth is when a business takes over or merges with another business.
Integration - ANS Integration is when one firm is integrated into another one.
