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Unit 1-Understanding Business Activity

The document outlines key business concepts across multiple chapters, including the definition of needs and wants, factors of production, specialization, types of sectors, business structures like sole traders and partnerships, and financing options such as loans and franchises.

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Damini Gupta
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45 views

Unit 1-Understanding Business Activity

The document outlines key business concepts across multiple chapters, including the definition of needs and wants, factors of production, specialization, types of sectors, business structures like sole traders and partnerships, and financing options such as loans and franchises.

Uploaded by

Damini Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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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

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