Business

An organisation that organises and combines resources to produce goods and services to satisfy the needs and wants of consumers while making a profit

Production

Organising and combining resources to produce goods and services

Scarcity OR Economic problem

Limited resources in relation to the unlimited wants.

Needs

Basic necessities that are crucial for survival and day to day life such as food, clothing, and shelter.

Wants

Desires of the consumers which are not basic necessities. Wants can be luxuries.

Opportunity cost

Next best alternative forgone

Resources / Factors of Production

Inputs used to make goods and services. For example, Capital, Enterprise, Land, & Labour.

Capital / Capital Goods

Amount invested in human made resources such as Equipment, Buildings and Machinery etc.

Enterprise

Risk Taking ability, or skills and knowledge.

Entrepreneur

A person with risk taking ability. A person who is willing to take risk and take business decisions.

Land

All natural resources such as Vegetables, Fruits, Cattle, Minerals etc.

Labour

Human effort or human resources, such as workers.

Added value

Difference between the selling price of a product and the cost of producing that product.

Adding value

Process of increasing the difference between the selling price of a product and the cost of producing that product. Trying to increase the Added Value.

Mark-Up

Extra amount added to the cost of the product in order to calculate the selling price.

Specialisation

When people and businesses concentrate on what they are best at.

Business specialisation

It is when a business focuses on producing a specific range of goods and services.

Labour specialisation OR Division of labour

The way in which work is divided so each worker concentrates on a specific task to become expert at it.

Revenue OR Sales Revenue

Amounts earned by selling goods and services. = Selling Price per unit x Quantity Sold

Expenses OR Costs

Amounts spent to run day to day operations of the business, and amount spent to produce goods and services.

Profit

It is when revenues exceed the costs

Loss

It is when costs exceed the revenues

Primary sector

Firms whose business activity involves the extraction of raw materials

Secondary sector

Firms that process and manufacture goods from natural resources

Tertiary sector

Businesses which provide services to consumers and other businesses.

Private sector

A business that is owned and controlled by normal individuals and not by the government.

Public sector OR Public corporation

A business that is owned and controlled by the government.

Industrialisation

It is when more factories are opened in the country. Increase in the secondary sector in an economy.

De-industrialisation

It is when factories are closed down in a country. Decrease in the secondary sector in an economy.

Less-Developed Economy OR Less Economically Developed Country (LEDC)

It is when a country is highly dependent on its primary sector firms, and its most GDP comes from the primary sector. It has low income and lower living standards.

Developing Country OR Developing Economy

It is when a country is highly dependent on its secondary sector firms, and its most GDP comes from the secondary sector. It has a middle income and moderate living standards.

Developed Economy OR More Economically Developed Country (MEDC)

It is when a country is highly dependent on its tertiary sector firms, and its most GDP comes from the tertiary sector. It has high income and high living standards.