CHAPTER 1-

● Business activity is the process of producing goods and services to satisfy consumer
demands

● Need is a good or service which is essential for living

● Want is a good or a service which people would like but is not essential for living

● Economic problem is a phenomenon when unlimited wanted cannot be met because

there are limited factors of production this creates scarcity

● Factors of production are the resources needed to produce goods and services-
land,capital labour and entreprise.

● Scarcity is when there are not enough goods and services to meet the wants of the
population

● Opportunity cost is the benefit that could have been gained from the alternative use of
the same resource

● Specialization is when people and businesses concentrate at what they are best at

● Division of labor is when production is divided into separate tasks and each employee
does just one of those task

● Consumer goods are products which are sold to the final consumer. They can be seen
and touched

● Consumer service are non tangible products that are sold

● Capital goods are the physical tangible goods used by other businesses to help produce
other goods and services.

CHAPTER 2-

● Primary sector are firms whose business activity involves extraction of natural resources

● Secondary sector are firms that process and manufacture goods from natural resources

● Tertiary sector are firms that supply a service to consumers and other businesses

● Chain of production is the production and supply of goods to the final consumer involves
activities from primary,secondary and tertiary sectors businesses.
 ● Mixed economy is an economy where the resources are owned and controlled by both
private and public sector

● Private sector is the part of the economy that is owned and controlled by individuals and
companies for profits

● Public sector is the part of the economy that is controlled by the state or government.

CHAPTER 3-

● Entrepreneur is an individual who has an idea for a new business and takes up the
financial risk of starting up and managing the business

● Business plan is a detailed written document outlining the purpose and aims of a
business which is often used to persuade lenders or investors to finance a business
proposal

● Revenue is the amount a business earns from the sale of products

● Business start ups is a newly formed business.They usually start small but some might
grow to become much bigger

● Horizontal integration brings two firms in the same industry who are also in the same
sector of business activity

● Vertical integration involves acquiring a business in the same industry but at a different
stage of the supply chain

● Conglomerate integration is bringing together of two business who are in completely

different industries

CHAPTER 4-

● Sole trader is a business that is owned and controlled by just one person who takes all
of the risks and receives all the profit

● Start up capital is the finance needed when setting up a business

● Partnership is a business formed by two or more people who will usually share
responsibilities for the day-day running of the business. Partners usually invest capital in
the business and will share profits

● Unincorporated business is a business that does not have legal identity separate from its
owners . The owners have unlimited liability for business debts.
● Unlimited liability is if an unincorporated business fails then the owners might have to
use their personal weath to finance any debts

● Shareholders is a person or organisation who owns shares in a limited company

● Private limited company is an often a small to medium sized company owned by

shareholders who have limited liability .The company cannot sell its shares to the
general public

● Public limited company is an often a large company owned by shareholders who have
limited liability .The company can sell its shares to the general public

● Limited liability is when the shareholders in a limited liability company which fails, only
risk losing the amount they have invested in the company and not any of their personal
wealths

● Dividends is a payment out of profit to the shareholders as a reward for investments

● Collateral is when non current assets offered as security against for borrowing

● Franchise is a business system where entrepreneurs buy the right to use the
name,logo,product of an existing business

● Joint venture is when two or more businesses agree to work together on a project and
set up a separate businesses for this purpose

● Public corporation is a business organisation that is owned and controlled by the state