Business studies review

Chapter 1
-Goods: are tangible products.
-Services: are intangible products.
-Need: is a good or service essential for living. (Food, water, shelter...)
-Want: is a good or service which people would like to have, but which is
not essential for living. People’s wants are unlimited. (iPhone, luxury
home, sport car.
-Factors of production are those resources needed to produce goods or
services. There are four factors of production:
1-Land: All natural resources provided by nature. (Metals,
Minerals, oil, gas…)
2-Labour: the effort that people contribute to the production of
goods and services.
3-Capital: is machinery, equipment and finance needed for the
manufacture of goods.
4-Enterprise: is people prepared to take the risk of setting up
businesses who brings together the factors of production to produce a
good or service. They are called Entrepreneurs.
-Opportunity cost: is the next best alternative given up by choosing
another item.
-Scarcity: the lack of goods and services to meet the population’s
wants. Unlimited wants + limited resources = Scarcity
-Specialization: people and businesses concentrate on what they are
best at.
1-Advantages: workers are trained in one task and specialize in
this- this increases efficiency and output, less time is wasted moving
from one work area to another.
2-Disadvantages: workers can become bored doing just one job-
efficiency might fall and if one worker is absent and no one else can
do the job, production might fall.
-Added value: is the difference between the selling price of a product
and the cost of bought in materials and components.