Need A need is an essential you

should have to live.

Want A want is a desire, which

might not be needed.

Scarcity Needs and wants are greater

than the resources available
to satisfy them.

Opportunity cost What you have to give

up/sacrifice in order to
choose something.
Land All natural resources used to
make a product or service

Labour The effort of workers

required to make a product
or service

Capital Finance, machinery and

equipment required to make
a product or service

Enterprise Skill and risk-taking ability

of the entrepreneur
Specialisation Specialisation is the focus
on one task. It is beneficial
for workers because it will
mean reduced errors if
workers know what they are
doing

Added value Increase in benefits of a

good or service which is
created at each stage of
production. E.g. design,
quality and marketing

Primary sector Involves the earth´s natural

resources (raw materials).
Examples include farming,
fishing, forestry,
extractions.

Secondary sector Involves taking natural

resources and converting
them into manufactured and
processed goods. E.G.
building/construction
Tertiary sector Involves providing
services/goods to both
consumers and other
businesses. Examples
include transport, banking,
and hotels.
 Free market A free market economy is
economy when all resources are
owned privately. The
government has no control
over the factors of
production.

Command/planned Where government plans

economy and controls use of
resources. They decide
everything, where people
work and what they do.

Mixed Where features from both

economy free and a planned economy
are combined. Most
countries of the world have
this type with a public and
private sector.

Sole trader A business that is owned

and controlled by just one
person who takes all of the
risks and receives all of the
profits
Partnership A business formed by two
or more people who will
usually share responsibility
for the day-to-day running
of the business. 

Private limited companies Often a small to medium-

sized company, owned by
shareholders who have
limited liability. The
company cannot sell its
shares to the public only to
relatives and friends.
Public limited companies Often a large company;
owned by shareholders who
have limited liability. They
can sell its shares to the
general public.

A business system where

entrepreneurs buy the right
to use to the name, logo and
Franchise product of an existing
business.
Private sector The private sector is formed
of businesses that are run by
the private sector, they aim
to make profit

Public sector They are often run and

funded by the country’s
government. E.g police,
education and military

Joint Two or more businesses

venture agree to work together on a
project and set up a separate
business for this purpose.

Public Limited Company A public limited company

(PLC) has shareholders who expect
a return for their investment.
Shares are sold to the
general public.

Nationalisation The process by which the

Government takes over the
privately run business or
industry
Entrepreneur Someone who sets up and
runs their own business.
They take the risk with the
potential reward for profit

The Business plan A written document that

outlines the aims and vision
of a business and the plans
to achieve it. This can be
used to attract investors

Business Size How a business is

measured. This could be in
terms of profit, value,
number of employees or
turnover

Internal growth This occurs when a business

opens new outlets or
factories or moves into new
markets abroad
External growth This happens when a
business buys another
business through a takeover
or a merger

The deed of partnership A legally binding document,

drawn up by partners. It will
include details of finance,
profit, holidays and salary
entitlement.

Limited liability Legally registered

companies (corporations)
are separate legal identities.
This means that the
company, not the owners is
liable for all its debts.

Dividend A dividend is a proportion

of profits paid to
shareholders in return for
their initial investment
Market share The proportion of sales a
business has within the
industry in which it operates

Social enterprise A business that seeks to

raise income which it
invests in a specific social
or environmental issue.

Stakeholder Anybody who has an

interest in what a business
does

Supplier These are businesses that

sell goods that other
businesses use to make their
own products
Government The Government is in
charge of running the
country and making
decisions on tax and
spending

Trade union These groups represent

employees in their
discussions with businesses
and the Government over
pay and working conditions

Pressure group These groups try to

influence policy in the
interests of a particular
cause or issue. E.g. Green
peace protests for a cleaner
environment