Business Paper 1 A: Revision Questions with Complete Solutions

Goods and services - Ansthe objects (goods) and the actions (services) that people value and produce to satisfy human wants why do businesses set up - Ans-to sell goods and provide services they know customers will like -gap in the market -want to be their own boss -to benefit others Sectors of the economy - Ansprimary, secondary, tertiary What is enterprise? - Ansinvolves identifying new business opportunities. an entrepreneur will always take the risk of getting involved in enterprise activity. Qualities of entrepreneurs - AnsRisk taking, determined, innovative, skilled, committed, motivated factors of production - Ans-land -labour -enterprise -capital What is opportunity cost? - Ansthe loss of potential gain from other alternatives when one alternative is chosen. What is a sole trader? - AnsA business owned by one person advantage of sole traders - Ans-easy to set up -you get to be your own boss -you are alone to decide on what happens with the profit Sole traders disadvantages - Ans-work long hours with no help -unlimited liability -unincorporated (business does not have legal identity, if anyone sues the business, they'll sue you personally. -hard to raise money as sole traders are seem as risky by the bank. partnership advantages - Ans-more owners means more ideas -share of work -more capital Partnership Disadvantages - Ans-each partner is responsible for what the other partner has done. -unlimited liability -more disagreements -the profits are shared what are limited companies - Ans-a limited company is incorporated : which means it has separate legal identity, tax, profit and bills are under the business name and not the owners. -it is owned by shareholders Private Limited Company (Ltd) - AnsShareholders are limited to family, friends, business partners Shares cannot be sold to the public Ltd (advantages) - Ans-limited liability -incorporated -easier to get loans and mortgage -have control over the business Ltd (disadvantages) - Ansmore expensive due to legal paper work -they are legally obligated to publish accounts every year (