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Business Studies IGCSEPDF 7
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➢
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● Business activity:
The process of producing goods and services to satisfy consumer needs.
● Needs:
Goods or services that are essential for living, such as food, water, and shelter.
● Wants:
Goods or services that people would like to have, but are not essential for living.
● Economic problem:
Resources are limited while wants are unlimited, creating scarcity.
● Scarcity:
The lack of sufficient resources to satisfy all wants.
● Factors of production:
Resources needed to produce goods and services — land, labour, capital, and
enterprise.
Land:
●
All natural resources used in production, such as minerals, water, and land itself.
● Labour:
The human effort required in the production process.
● Capital:
The man-made resources such as machinery, tools, and buildings used to
produce goods and services.
● Enterprise:
The skill and risk-taking ability of the person who brings the other factors of
production together to produce goods and services.
● Opportunity cost:
The next best alternative forgone when making a choice.
● Added value:
The difference between the selling price of a product and the cost of bought-in
materials and components.
Definitions List:
➢ Unit 1: Understanding Business Activity