Business Studies IGCSE-Chapter 1 - 3 TEST QUESTIONS FULLY SOLVED 2024

Need Goods or services essential for living Want Goods or services which people would like to have, but which is not essential for living (Unlimited) Brainpower Read More Economic problem There exist unlimited wants but limited resources to produce the goods or services to satisfy those wants. (Scarcity) Factor of production Resources needed to produce goods or services Scarcity The lack of sufficient resources to fulfil population's wants Land All natural resources by nature, ex. fields, forest, oil, gas, metal, coal and other mineral resources Labour The number of people hired to make products Capital The finance, machinery and equipments needed to manufacture goods Enterprise Skill and risk-taking ability of entrepreneurs Entrepreneurs Someone who organises, operates and takes risks in a new business venture. Opportunity cost The next best alternative given up by choosing another item Specialization People and businesses concentrate on what they are best at Advantages of Specialization workers are trained on one task and less time is wasted Disadvantages of Specialization workers become bored doing one job and if a worker is absent and no one can do the job, production might be stopped Division of labour Production is divided into different tasks and each worker performers specific tasks Businesses Combine factors of production to make products (goods and services) which satisfy people's wants (purpose of business activity) Features of businesses combines scare factors, produce goods and services, and employs people Added value The difference between selling price and cost of materials How to Add Value Increase selling price and reduce cost of materials Sectors of Production The three stages a product passes through before reaching the consumer. Primary Sector Extracts, uses and sells raw materials, ex. woodcutter Secondary sector Manufactures goods using raw materials, ex. furniture maker Tertiary sector Sells products and provides services to consumers, ex. retailer Relative importance of economic sectors 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 Decline in the importance of the secondary manufacturing sector of industry in a country Reasons for de-industrialisation al resources for secondary sector become depleted developed economies are losing competitiveness in manufacturing to the newly industrialized countries a country's total wealth increases and living standards rise, consumers tend to spend a higher proportion of their incomes on service such as travel and restaurants than on manufactured products from primary products Private sector Businesses owned by private individuals. Public sector Businesses owned by the government or state Businesses in the public sector health, education, defence, public transport, water supply and electricity supply Mixed economy has both a private sector and a public sector Privatisation governments sell public sector firms to private individuals. Privatisation advantages private sector businesses are more efficient since the main objective of theirs is profit and therefore costs must be controlled more capital can be invested in the business than the government can afford Privatisation disadvantages more workers might be unemployed since the private sector businesses have to cut the costs private sector businesses are less likely to focus on social objectives Capital The money invested into a business by the owners Chain of production The production and supply of goods to