Chapter 1: Understanding Business
1.1 What is business?
A business is an activity or organization that provides goods or services to customers in
exchange for money or other forms of payment. Many businesses aim to earn a profit while
satisfying people's needs and wants.
Example: A student sells homemade cookies at school. The student buys ingredients, prepares
the cookies, and sells them to classmates. This is a small business because the student offers a
product to customers in exchange for money.
1.2 Why is business important?
Businesses play an important role in people's lives and in the economy.
● Provides goods and services: Businesses supply products such as food, clothes, school
supplies, and transportation.
● Creates employment: Businesses hire workers who earn salaries or wages.
● Generates income: Business owners can earn money from their business activities.
● Supports the economy: Businesses buy materials, pay workers, and contribute to
economic activity.
● Encourages innovation: Businesses develop new products and better ways of serving
customers.
● Contributes to government revenue: Businesses may pay taxes that help fund public
services.
1.3 Main goals of a business
Goal Explan ation Exam ple
Profit Earn more money than the A bakery earns more than its
business spends total costs.
Customer satisfaction Meet customers' needs and A store sells fresh, quality
, expectations products.
Growth Expand the business over A small food stall opens
time another branch.
Survival Continue operating despite A shop controls expenses
challenges during slow months.
Social responsibility Act responsibly toward A store reduces unnecessary
people and the environment
1.4 Characteristics of a business
1. Economic activity: It involves producing, buying, or selling goods and services.
2. Regular transactions: Business activities are usually repeated rather than being a single
personal sale.
3. Customer focus: It offers something that customers need or want.
4. Risk and uncertainty: Sales, costs, and customer demand can change.
5. Profit motive: Many businesses aim to earn a profit, although some organizations have
different primary goals.
Remember this
A business is not guaranteed to earn a profit. It may experience losses when expenses are higher
than revenue.
Quick example: If you sell ₱1,000 worth of food but spend ₱700 on ingredients, packaging, and
other costs, your profit is ₱300.
,Chapter 2: Needs, Wants, and Economic Resources
2.1 Needs versus wants
A need is something essential for survival and basic well-being. A want is something a person
would like to have but can generally live without.
Needs
● Food
● Water
● Basic clothing
● Shelter
● Essential healthcare
, Wants
● Expensive sneakers
● Gaming accessories
● Designer bags
● Luxury vacations
● The newest phone when an older one works
A person may need a phone for school, work, or communication, but buying the most expensive
model may be a want.
2.2 Scarcity
Scarcity happens when resources are limited while people's wants are many. Because of
scarcity, individuals and businesses must make choices.
Example: You have ₱200. You want to buy lunch for ₱100 and a shirt for ₱180. You cannot buy
both with your available money, so you must decide how to use your budget.
2.3 Opportunity cost
1.1 What is business?
A business is an activity or organization that provides goods or services to customers in
exchange for money or other forms of payment. Many businesses aim to earn a profit while
satisfying people's needs and wants.
Example: A student sells homemade cookies at school. The student buys ingredients, prepares
the cookies, and sells them to classmates. This is a small business because the student offers a
product to customers in exchange for money.
1.2 Why is business important?
Businesses play an important role in people's lives and in the economy.
● Provides goods and services: Businesses supply products such as food, clothes, school
supplies, and transportation.
● Creates employment: Businesses hire workers who earn salaries or wages.
● Generates income: Business owners can earn money from their business activities.
● Supports the economy: Businesses buy materials, pay workers, and contribute to
economic activity.
● Encourages innovation: Businesses develop new products and better ways of serving
customers.
● Contributes to government revenue: Businesses may pay taxes that help fund public
services.
1.3 Main goals of a business
Goal Explan ation Exam ple
Profit Earn more money than the A bakery earns more than its
business spends total costs.
Customer satisfaction Meet customers' needs and A store sells fresh, quality
, expectations products.
Growth Expand the business over A small food stall opens
time another branch.
Survival Continue operating despite A shop controls expenses
challenges during slow months.
Social responsibility Act responsibly toward A store reduces unnecessary
people and the environment
1.4 Characteristics of a business
1. Economic activity: It involves producing, buying, or selling goods and services.
2. Regular transactions: Business activities are usually repeated rather than being a single
personal sale.
3. Customer focus: It offers something that customers need or want.
4. Risk and uncertainty: Sales, costs, and customer demand can change.
5. Profit motive: Many businesses aim to earn a profit, although some organizations have
different primary goals.
Remember this
A business is not guaranteed to earn a profit. It may experience losses when expenses are higher
than revenue.
Quick example: If you sell ₱1,000 worth of food but spend ₱700 on ingredients, packaging, and
other costs, your profit is ₱300.
,Chapter 2: Needs, Wants, and Economic Resources
2.1 Needs versus wants
A need is something essential for survival and basic well-being. A want is something a person
would like to have but can generally live without.
Needs
● Food
● Water
● Basic clothing
● Shelter
● Essential healthcare
, Wants
● Expensive sneakers
● Gaming accessories
● Designer bags
● Luxury vacations
● The newest phone when an older one works
A person may need a phone for school, work, or communication, but buying the most expensive
model may be a want.
2.2 Scarcity
Scarcity happens when resources are limited while people's wants are many. Because of
scarcity, individuals and businesses must make choices.
Example: You have ₱200. You want to buy lunch for ₱100 and a shirt for ₱180. You cannot buy
both with your available money, so you must decide how to use your budget.
2.3 Opportunity cost
