Cambridge IGCSE Business Studies Key Terms
Questions A nd Answers 2025/2026
CHAPTER 1 - BUSINESS ACTIVITY - CORRECT ANSWER-
Business - CORRECT ANSWER-An organisation which produces goods
and services.
Need - CORRECT ANSWER-A need is a good or service essential for
living.
Want - CORRECT ANSWER-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 - CORRECT ANSWER-There exist unlimited wants but
limited resources to produce the goods and services to satisfy those
wants, this creates scarcity.
Scarcity - CORRECT ANSWER-Scarcity is the lack of sufficient products to
fulfill the total wants of the population.
,Factors of production - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-Labour is the term
used to describe the number of people available to make products.
(factor of production) Capital - CORRECT ANSWER-Capital is the finance,
machinery and equipment needed for the manufacture of goods.
(factor of production) Enterprise - CORRECT ANSWER-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 - CORRECT ANSWER-Opportunity cost is the next best
alternative given up by choosing another item.
Specialisation - CORRECT ANSWER-Specialisation occurs when people
and businesses concentrate on what they are best at.
,Division of labour - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-
Primary sector - CORRECT ANSWER-The primary sector of industry
extracts and uses the natural resources of the earth to produce raw
materials used by other businesses
Secondary sector - CORRECT ANSWER-The secondary sector of industry
manufactures goods using raw materials provided by the primary
sector.
Tertiary sector - CORRECT ANSWER-The tertiary sector of industry
provides services to consumers and the other sectors of industry.
, De-industrialisation - CORRECT ANSWER-De-industrialisation occurs
when there is a decline in the importance of the secondary,
manufacturing sector of industry in a country.
Mixed economy - CORRECT ANSWER-A mixed economy has both a
private sector and a public sector.
Private sector - CORRECT ANSWER-Businesses not owned by the
government.
Public sector - CORRECT ANSWER-Government owned and controlled
businesses and organisations.
CHAPTER 3 - ENTERPRISE, BUSINESS GROWTH AND SIZE - CORRECT
ANSWER-
Entrepreneur - CORRECT ANSWER-An entrepreneur is a person who
organises, operates and takes the risk for a new business venture.
Business plan - CORRECT ANSWER-A business plan is a document
containing the business objectives and important details about the
operations, finance and owners of the new business.
Questions A nd Answers 2025/2026
CHAPTER 1 - BUSINESS ACTIVITY - CORRECT ANSWER-
Business - CORRECT ANSWER-An organisation which produces goods
and services.
Need - CORRECT ANSWER-A need is a good or service essential for
living.
Want - CORRECT ANSWER-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 - CORRECT ANSWER-There exist unlimited wants but
limited resources to produce the goods and services to satisfy those
wants, this creates scarcity.
Scarcity - CORRECT ANSWER-Scarcity is the lack of sufficient products to
fulfill the total wants of the population.
,Factors of production - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-Labour is the term
used to describe the number of people available to make products.
(factor of production) Capital - CORRECT ANSWER-Capital is the finance,
machinery and equipment needed for the manufacture of goods.
(factor of production) Enterprise - CORRECT ANSWER-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 - CORRECT ANSWER-Opportunity cost is the next best
alternative given up by choosing another item.
Specialisation - CORRECT ANSWER-Specialisation occurs when people
and businesses concentrate on what they are best at.
,Division of labour - CORRECT ANSWER-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 - CORRECT ANSWER-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 - CORRECT ANSWER-
Primary sector - CORRECT ANSWER-The primary sector of industry
extracts and uses the natural resources of the earth to produce raw
materials used by other businesses
Secondary sector - CORRECT ANSWER-The secondary sector of industry
manufactures goods using raw materials provided by the primary
sector.
Tertiary sector - CORRECT ANSWER-The tertiary sector of industry
provides services to consumers and the other sectors of industry.
, De-industrialisation - CORRECT ANSWER-De-industrialisation occurs
when there is a decline in the importance of the secondary,
manufacturing sector of industry in a country.
Mixed economy - CORRECT ANSWER-A mixed economy has both a
private sector and a public sector.
Private sector - CORRECT ANSWER-Businesses not owned by the
government.
Public sector - CORRECT ANSWER-Government owned and controlled
businesses and organisations.
CHAPTER 3 - ENTERPRISE, BUSINESS GROWTH AND SIZE - CORRECT
ANSWER-
Entrepreneur - CORRECT ANSWER-An entrepreneur is a person who
organises, operates and takes the risk for a new business venture.
Business plan - CORRECT ANSWER-A business plan is a document
containing the business objectives and important details about the
operations, finance and owners of the new business.
