B.

Studies (C1 Business Activity) [______

Revision

Q1] Define these terms:

Needs; A need is a good or service essential for living.

Wants; G/s which people would like to have but is not essential for living.
Scarcity; Scarcity is the lack of sufficient products to fulfill total wants of population
Opportunity cost; It is the next best alternative foregone by choosing up another item.
Specialization; Specialization occurs when people/b.s concentrate on what they are best at.
Division of Labour; Is when production process is split up into different tasks and each workers
perform one of these tasks.
Land; Includes all natural resources provided by nature.
Labour; Is the number of people available to make products.
Capital; It is the finance, machinary, and equipment needed for manufacture of goods.
Enterprise; Is the risk – taking ability of the person who brings the other resources together for
production of g/s.

Q2] What is the purpose of business activity ?

1. To combine factors of production to make g/s to satisfy people’s wants.
2. To employ people so that they can receive wages and use it for consumption.

Q3] What are the advantages/disadvantages of specialization to a business ?

A-Increases efficiency and output

A exp : As workers are trained in one task, they become fast due to repetition which results in
more output.
B-Less time wastage in shifting
B exp : Workers wouldnot waste time in shifting from one task to another, thus no time would be
wasted in moving jobs.
C-Quick and cheap
C Exp No further training expense will have to be incurred as workers become highly skilled and
the production becomes faster day by day.
D-Boredom in work
D explained : Workers become bored due to monotonous work thus the business will not be done
with maximum motivation and incentives will needed to give to the workers.
E-Absenteism equals to Production pause
E explained : If one workers is out of work , the whole production process comes to a break and
thus the objectives of business can be effected by it.
Q4) Define added value ? Explain how businesses can enhance added value.

Ans;
Added value is the difference between Selling price of the product and the Cost of bought-in
materials and components. Businesses can enhance added value by

(a: Increase S.P but keep costs the same) Exp : It can be done by increasing quality of Goods
and services so that people would be ready to pay high prices. Also advertising tactics can help
increase image of products but advertising costs must be kept low.

(b: Reduce Costs without changing S.P ) Exp : It can be done by purchasing from cheapest
supplier considering that the quality of goods/services will not be effected by it.
Economics ( C1 C2 C3 )

Eco C1 : The nature of economic problem l C1

[_________
Q1; Define the following terms

Resources : These are the factors used to produce g/s . Includes land,labour , capital and enterprise
Economic Problem : When unlimited wants exceeds finite resources , it creates economic problem
Scarcity : Situation where there is not enough to satisfy people’s wants.
Economic goods : A product which requires resources to produce it and therefore has an opportunity cost
Free goods : A product which doesn’t requires any resources to make it and it has no opportunity cost

Q2; Explain why does scarcity continues to exist and the basic problem cannot be resolved ?

Growth in wants exceed growth of resources :

The people’s wants tend to rise as time passes at higher rate but the resources , although they are growing ,
but not adequately so there are not enough goods/services to satisfy all wants.
Increase in Population :
As the population increases , the wants increase along with it . Unfortunately there are not enough available
resources to satisfy all such wants of the growing population , so the economic problem cannot be resolved.

Eco C2 : Factors of production

Q1 : Define with examples the four factors of production ;

Land; gifts of nature available for production.

Labour; Human physical or mental effort used in production of g/s.
Capital; Human made goods used in production.
Enterprise; Risk taking and key decision making ability.
Consumer goods; G/s purchased by households for their own satisfaction.

Q2 : Describe any two features of Enterprise ,

Enterprise features;
- Enterprise is the Risk taking ability to run or expand a certain business , with a good enterprise an
entreprenuer would successfully combine the other three factors of production and try to fulfill the demands
with minimal resources being used.
- It is also decision making ability of an entreprenuer , Where an entreprenuer possesses such skill it
becomes easier for subordinates to manage/run the business and help overall profits grow.

Q3 : Explain the mobility of factors of production ?

Land : Is mobile as can be used for different purposes e:g Farming land may be used for factory
Labour : Workers may change location where they work due to several reasons or may shift their jobs
Capital : Capital's mobility is when one asset/capital is being used for other business and purpose
Enterprise : Mobility of enterprise depends upon mobility of enterprenuer , when entrepreneur changes his
leadership from one b.s to another , the enterprise is shifted automatically and so enterprise becomes mobile

Q4 : Analyse why mobility of labour may increase over time.?

_ Due to high prices of goods / services
_ Due to labor being unsatisfied with job
_ Due to Bad or not suitable environment for workers
_ Due to changes in sectors of economy
 Eco C3 : Opportunity Cost
Q1 : Define Opportunity cost with examples ?

Opportunity cost is the next best alternate forgone by choosing something else. Example would be a person
who chooses to buy IPAD instead of laptop, therefore laptop becomes opportunity cost for that person.

Q2 : Explain why opportunity cost is an important concept for Consumers/workers/producers

a) Consumers: It helps consumers in deciding what to buy as they must make a choice due to lack of
resources they have for spending.E:g, A person must decide whether he should spend on vacation or spend
on buying a Smart TV
b) Producers : In context of every small and large businesses, producers must decide what to produce, for
whom to produce and how to produce. While answering these questions, they always choose as they cannot
produce everything they want due to finite resources.
Q3 :
Discuss whether a decision by gov.t, with limited financial resources, to increase expenditure on education by
25% , over a three year period , is likely to be an appropriate decision.?

Intro :
Govrmnt faces choice of spending on education or on other areas, as limited resources are available due to
scarcity , cannot satisfy all demands and therefore choose between.
Favour :
Spending in education leads to high literacy rates in economy. Improved standards of living and high chances
of improved employment as more people are now being educated.
Against :
Next best alternative foregone, could include health , infrastructure spending , spending on industrialization
Conclusion :
I support education spending because…

Government in this scenario has a choice to spend on education or other useful matters such as infrastructure
facilities (road, transport, tourism, real estate) , health facilities , defence or welfare of the country. The limited
financial resources are creating scarcity and therefore Government must choose in order to use resources
efficiently.
If government spends on education it will increase literacy rate in the country thus making more and more
people civilized and educated . This will help to boost the economic growth as more efficient and hardworking
labours would now be available in a shorter upcoming future i.e 3-4 years in the country. A good economy is
dependent upon its educated and knowledgeable persons and their efforts. Furthermore spending on
education will also improve living of standards of citizens which will help country move towards developed
from developing/underdeveloped.
However , instead of increasing 25% spending on education , Government could use the same resources on
health facilities or infrastructure facilities. If a country want to progress it needs enough hospitals and proper
roads . This attracts investments from foreign as well as local. The spending on hospitals will increase the life
expectancy ratio of the country resulting from low death rates and high birth rates. Proper roads and
infrastructure will ensure lesser accidents and make the businesses grow faster and more productively.
An appropriate decision would be to spend on facilities such as the education sector , although it might seem
less beneficial but it will provide for the economy in the long run and will help achieve manier of the objectives
of government by just spending on education.
 Helpful Words wri ng b.s eco Answers (01)
1) Favourable / Not favourable;
The business’ decision to expand will prove to be favourable .

2) Maximize benefits and minimize costs

Entrepreneurs o en mes a empt to maximize benefits and minimize costs in order to achieve
market dominancy, higher profits and compe ve advantage.

3) Firms , ins tu ons and organiza ons

While in free market economy, all firms ins tu ons and organiza ons have the goal of achieving
maximum profits from minimal costs.

4) Leisure-pleasure
Wants mostly include leisure pleasure facili es such as more improvised and tasty foods, big
houses and advanced vehicles.

5) Increase : use rise / soar / expand

Prices of petrol has soared since last year in Pakistan.

Use of technology has risen in most manufacturing industries for produc vity
The business o en remain small because they donot possess sufficient financial capital to
expand its opera ons.

6) Decrease : use shrink / contract / diminish

7) Against to any point : Contrary to this view/point
People demand more when prices are low, contrary to this, people demand less when prices are
high.

8) This will result in … : Use ‘ It leads to ‘

Government’s spending in educa on leads to rise in literacy rates in an economy.

9) Country: use economy / state

The economy’s GDP depends upon the performance of its states’ firms, ins tu ons and
organisa ons.

10) Flood the market : produce & sell at large numbers.

Bata has flooded the market with its new black school shoes causing a high demand.