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    1 Business Activity

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    christineshweyeshoonlae19
    The document discusses key economic concepts including needs, wants, scarcity, factors of production, specialization, division of labor, and business activities. It defines these terms and explains concepts like opportunity cost and how businesses add value. The document is aimed at explaining foundational business and economics topics.

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    1 Business Activity

    Uploaded by

    christineshweyeshoonlae19
    5 views3 pages
    The document discusses key economic concepts including needs, wants, scarcity, factors of production, specialization, division of labor, and business activities. It defines these terms and explains concepts like opportunity cost and how businesses add value. The document is aimed at explaining foundational business and economics topics.

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    1-Business-Activity

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    The document discusses key economic concepts including needs, wants, scarcity, factors of production, specialization, division of labor, and business activities. It defines these terms and explains concepts like opportunity cost and how businesses add value. The document is aimed at explaining foundational business and economics topics.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5 views3 pages

    1 Business Activity

    Uploaded by

    christineshweyeshoonlae19
    The document discusses key economic concepts including needs, wants, scarcity, factors of production, specialization, division of labor, and business activities. It defines these terms and explains concepts like opportunity cost and how businesses add value. The document is aimed at explaining foundational business and economics topics.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Knockout .Economics-No.

    1 Economics and Business Studies Tutors


    www.knockouteconomics.com
    Private class, Small Course, Online course :@Knockout.economics
    Section 1: Understanding business activity
    Chapter 1: Business Activity
    Key terms
    1. Need: is a good or service essential for living.
    2. Want: is a good or service which people would like to have, but which is not
    essential for living. People’s wants are unlimited.
    3. Economic problem: there exist unlimited resources to produce the goods and
    services to satisfy those wants. This creates scarcity.
    4. Factors of production: are those resources needed to produce goods and services.
    There are 4 factors of production and they are in limited supply.
    5. Scarcity: is the lack of su cient products to ful ll the total wants of the population.
    6. Opportunity cost: the next best alternative given up by choosing another item.
    7. Specialization: occurs when people and businesses concentrate on what they are
    best at.
    8. Division of labour: is when the production process is split up into di erent tasks
    and each worker performs one of these tasks. It is a form of specialisation.
    9. Businesses: combine factors of production to make products(goods and services)
    which satisfy people’s wants.
    10. Added value: is the di erence between the selling price of a product and the cost
    of bought materials and components.

    No part of this resource may be reproduced, distributed, or transmitted in any form by any means for non-personal use
    without the prior written permission from Knockout.Economics
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    Knockout .Economics-No.1 Economics and Business Studies Tutors
    www.knockouteconomics.com
    Private class, Small Course, Online course :@Knockout.economics
    1. Economic Problem
    Economic problem : resources are scarce and want is unlimited want. This makes
    people have to choose and therefore opportunity cost occurs.
    Need: goods and services that are essential for living such as water, medicine.
    Want: goods and services that people desire to have such as watch, cars.

    Resources: are factors of production including land, labour, capital and enterprise

    Factors of De nition Example


    production

    1.Land Natural resources oil and coal

    Workers who are used in production


    2.Labour Builder, teacher
    of goods and services

    Human-made goods used in Machines, equipment,


    3.Capital
    production tools

    Who take risks and make key The owner of a


    4.Enterprise
    decisions in business business

    2. Opportunity Cost
    : Cost of an alternative that must be forgiven in order to pursue certain action.

    3. Specialization
    : People concentrate on what they are best at.
    E.g. A man does only one process of production, he specializes in.

    No part of this resource may be reproduced, distributed, or transmitted in any form by any means for non-personal use
    without the prior written permission from Knockout.Economics
    fi
    Knockout .Economics-No.1 Economics and Business Studies Tutors
    www.knockouteconomics.com
    Private class, Small Course, Online course :@Knockout.economics
    4. Division of labour
    : Production process is split up into di erent tasks and each worker performs one
    of these tasks.

    Advantages Disadvantages

    1. Increasing e ciency and the 1. Creating boredom since workers do


    amount of output. the same task all the time.
    2. Reducing production time. 2. E ciency might be dropped
    3. Reducing error and cost of 3. Demotivating employees to create
    production. new things.
    4. Training a worker to do only one 4. If a worker is absent, no one can
    task can reduce training cost. replace. The production process will
    be stopped.

    5. The purpose of business activities


    : to combine factors of production to make products or services to satisfy customers.
    1. Combining factors of production including land, labour, and capital.
    2. Producing products or services to satisfy needs and wants.
    3. Employing workers and workers can get wages as a return.

    6. Value added
    : Selling price - Material price

    Knockout tip: It is not the pro t, need to concern other expenses eg. labour cost,
    operation cost etc.

    How could a business increase value-added ?


    1. Increasing price of a product and keeping material costs unchanged.
    2. Reducing material costs and keeping selling price unchanged.

    No part of this resource may be reproduced, distributed, or transmitted in any form by any means for non-personal use
    without the prior written permission from Knockout.Economics
    ffi
    ffi
    fi
    ff

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