Business
Studies NOTES
CH1-7
Section 1: Understanding
Business Activity
Chapter: 1 Business Activity
Need: It is a Good or Service essential for living
Want: It is a Good or Service people would like to
have for luxury and not completely essential for
survival
The Economic Problem is that there are unlimited
wants but limited resources to satisfy them
Factor Of Production are resources required to
produce goods or services
There are four Factors of Production:
Land: It is the term used to cover all
natural resources provided by nature
Labour: It is the number of people
available to make products
Capital: It refers to the finance, machinery
and equipment required to manufacture
goods
Enterprise: It is the skill and risk_taking
ability of the person that brings the other
factors of production together to produce a
good or service. There people are called
Entrepreneurs
Scarcity is the lack of enough resources to fulfil
the wants of the population
, Opportunity Cost is giving up the next best option
when choosing an option
Specialization is when people and businesses
focus on what they are best at
Specialization is now very common
because
Specialized machinery and technology are
now widely available
Increasing competition means that
businesses will be required to keep costs
low
Most people recognize that higher
standards of living that can result from
specialization
Division of Labour is when the process of
production is separated into different tasks
performed by a single worker each. It is a form of
specialization
Businesses
Purpose of Business Activity:
People have unlimited wants
The four factors of production are in limited
supply
Scarcity results from limited resources and
unlimited wants
Choice is necessary when resources are
scarce leading to Opportunity Costs
Specialization improves the efficient use of
resources
What Business Activity Does
Combines the scarce factors of production
to produce goods and services
Produces goods and services which are
needed to satisfy the needs and wants of
the population
Employs people as workers and pays them
wages allowing them to consume products
made by other people
, Added_- Value is the difference between the
selling price and cost of making the product
Why is added value important?
It can pay other costs such as labour costs,
management expenses and costs including
advertisement and electricity
May be able to make a profit if these other
costs come to a total that i less than the
added value
How could a business increase added value?
Increase selling price but keep cost of
materials same.. This might e possible if
the business tries to create a higher quality
image got the product or service.
Reduce the cost of materials but keep the
price same.Although low priced materials
may reduce quality of the product and ruin
the brand image
Chapter: 2 Classification Of
Businesses
Stages of Economic Activity:
There are three stages of production
Stage 1-Primary Sector:
Stage 2- Secondary Sector
Stage 3- Tertiary Sector
Relative Importance of The Tertiary Sector
Percentage of the country’s total number of
workers employed in each sector
Value of output of goods and services and
the proportion this is of total national
output
De-industrialisation is when there is a decline in
the importance of the secondary, manufacturing
sector of industry in a country
Reasons for the change in relative importance
of the three sectors:
Sources of some primary products are
depleted.
Studies NOTES
CH1-7
Section 1: Understanding
Business Activity
Chapter: 1 Business Activity
Need: It is a Good or Service essential for living
Want: It is a Good or Service people would like to
have for luxury and not completely essential for
survival
The Economic Problem is that there are unlimited
wants but limited resources to satisfy them
Factor Of Production are resources required to
produce goods or services
There are four Factors of Production:
Land: It is the term used to cover all
natural resources provided by nature
Labour: It is the number of people
available to make products
Capital: It refers to the finance, machinery
and equipment required to manufacture
goods
Enterprise: It is the skill and risk_taking
ability of the person that brings the other
factors of production together to produce a
good or service. There people are called
Entrepreneurs
Scarcity is the lack of enough resources to fulfil
the wants of the population
, Opportunity Cost is giving up the next best option
when choosing an option
Specialization is when people and businesses
focus on what they are best at
Specialization is now very common
because
Specialized machinery and technology are
now widely available
Increasing competition means that
businesses will be required to keep costs
low
Most people recognize that higher
standards of living that can result from
specialization
Division of Labour is when the process of
production is separated into different tasks
performed by a single worker each. It is a form of
specialization
Businesses
Purpose of Business Activity:
People have unlimited wants
The four factors of production are in limited
supply
Scarcity results from limited resources and
unlimited wants
Choice is necessary when resources are
scarce leading to Opportunity Costs
Specialization improves the efficient use of
resources
What Business Activity Does
Combines the scarce factors of production
to produce goods and services
Produces goods and services which are
needed to satisfy the needs and wants of
the population
Employs people as workers and pays them
wages allowing them to consume products
made by other people
, Added_- Value is the difference between the
selling price and cost of making the product
Why is added value important?
It can pay other costs such as labour costs,
management expenses and costs including
advertisement and electricity
May be able to make a profit if these other
costs come to a total that i less than the
added value
How could a business increase added value?
Increase selling price but keep cost of
materials same.. This might e possible if
the business tries to create a higher quality
image got the product or service.
Reduce the cost of materials but keep the
price same.Although low priced materials
may reduce quality of the product and ruin
the brand image
Chapter: 2 Classification Of
Businesses
Stages of Economic Activity:
There are three stages of production
Stage 1-Primary Sector:
Stage 2- Secondary Sector
Stage 3- Tertiary Sector
Relative Importance of The Tertiary Sector
Percentage of the country’s total number of
workers employed in each sector
Value of output of goods and services and
the proportion this is of total national
output
De-industrialisation is when there is a decline in
the importance of the secondary, manufacturing
sector of industry in a country
Reasons for the change in relative importance
of the three sectors:
Sources of some primary products are
depleted.
