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Chapter 1: Business Activities

Learning Objectives:
After completing each objective, circle how
LO1: Identify needs, wants, scarcity and opportunity costs. well you understand.

LO2: Identify and explain economic activity and the use of

specialisation.

LO3: Analyse the purpose of business activity and the concept

of added value.

LO1: Identify needs, wants, scarcity and opportunity cost.

Need definition:

………………… A need is something essential to survive …………………. …………………………………

Want definition:

……… A want is something which we would like but do not need to survive ………………….………………

What is the economic problem?

The economic problem – There exists an __unlimited__ amount of _human’s wants_ but limited _resources_

to produce goods and services to satisfy those __wants_. This creates __scarcity_.

Scarcity

… Is unlimited wants and needs, but the resources to satisfy them are limited. ……………….…………………

How does scarcity affect people around you?

… Scarcity influences the perceived value of goods and services, and it also plays a role in how

governments and private companies make decisions about allocating resources. …………

Unlimited wants and

needs.
Limited resources.
+= Scarcity
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LO2: Identify and explain the factors of production, the development of economic activity and the use of

specialisation.

Opportunity cost:

………………Opportunity cost in business refers to the value of the next best alternative that must be

foregone when a business decides to allocate its resources.…………………….…………………….…………………….…

What are factors of production?

…Lands, labor, capital, entrepreneurship …………………………………………………………………………………………………………

4 factors of
production

Capital_:

Finance, tools, and machines (physical capital) necessary to operate the business.………………………………

…………………………………………………………………………………………………………………………………………………………………………

Enterprise_:
… Operator and organizer of the business ……………….…………………….…………………….…………………….………………………

Lands_:

land and everything that is derived from it, such as minerals, water, forests, and agricultural products.

…………………….…………………………………………………………………………………………………………………………………….
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Labor__:

It includes both physical and mental work performed by workers, ranging from manual labor to specialized

skills and knowledge.…………………….…………………….…………………….…………………….………………………….

Write the words that come to mind when you think of this word:

Special

Specialisation occurs when ___ individuals_ and __ organizations_ focus on what they are _best_ at.

Examples?

Baker baking bread.

Division of labour is when the _ production_ process is split up into different __task__ and each ___worker__

performs one of these tasks. It is a form of _ specialization__.

Advantages of division of labour Disadvantages of division of labour

* Increased efficiency * Lack a broader skill set

* Higher productivity * Specialised roles can be time-consuming and

expensive.

LO3: Analyse the purpose of business activity and the concept of added value.

What is a business?

Combine factor of production to make products (goods and services) that satisfy people’s wants …………………
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What is the purpose of the business activity?

Added value: is the difference between the __selling prise___of a product and the __cost___ of bought in

materials and components.

Importance of value added:

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Added value can pay other __ expenses__ such as labour __ salaries__, __ operating__ expenses and costs

such as ___rent___ and ___utilities___.

What are two ways a business can add value to their products?

1. Mking your product distinct or unique in some way that sets it apart from competitors.

2. Increase quality of a product can add significant value. ………………………………………………………………………………

………………………………………………………………………………………………………………………………………………………………….

Revision Questions

1. What is the real cause of the economic problem? [2 marks]

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2. Why does scarcity of resources result in choices and opportunity cost? [2 marks]

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3. What is the difference between a need and a want? [2 marks]

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4. Why is specialisation important? [2 marks]

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5. Choose a business and a product the business makes. How can that business add value to the product? [2

marks]

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Total _____/10
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