Podcast
Questions and Answers
A need is a good or service which people would like to have, but which is not essential for living.
A need is a good or service which people would like to have, but which is not essential for living.
False
The economic problem is that there exist unlimited wants but limited resources to produce the goods and services to satisfy those wants.
The economic problem is that there exist unlimited wants but limited resources to produce the goods and services to satisfy those wants.
True
Give three examples of factors of production.
Give three examples of factors of production.
Land, labour, capital and enterprise
What is opportunity cost?
What is opportunity cost?
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What is specialisation?
What is specialisation?
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What is division of labour?
What is division of labour?
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What is added value?
What is added value?
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What is the role of the primary sector?
What is the role of the primary sector?
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What is the role of the secondary sector?
What is the role of the secondary sector?
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De-industrialization occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
De-industrialization occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
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A mixed economy has only a state (public) sector.
A mixed economy has only a state (public) sector.
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Capital is the money invested into a business by the owners.
Capital is the money invested into a business by the owners.
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An entrepreneur is someone who organises, operates, and takes the risk for a new business venture.
An entrepreneur is someone who organises, operates, and takes the risk for a new business venture.
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Internal growth occurs when a business expands its existing operations.
Internal growth occurs when a business expands its existing operations.
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External growth occurs when a business takes over or merges with another business.
External growth occurs when a business takes over or merges with another business.
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A takeover or acquisition is when one business buys out the owners of another business, which then becomes part of the acquiring business.
A takeover or acquisition is when one business buys out the owners of another business, which then becomes part of the acquiring business.
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A merger is when the owners of two businesses agree to join their businesses together to make one business.
A merger is when the owners of two businesses agree to join their businesses together to make one business.
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Horizontal integration is when a business merges with or takes over another one in the same industry at a different stage of production.
Horizontal integration is when a business merges with or takes over another one in the same industry at a different stage of production.
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Vertical integration is when one business merges with or takes over another one in the same industry, but at a different stage of production. Vertical integration can be forward or backward.
Vertical integration is when one business merges with or takes over another one in the same industry, but at a different stage of production. Vertical integration can be forward or backward.
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Conglomerate integration is when one business merges with or takes over a business in a completely different industry. This is also known as diversification.
Conglomerate integration is when one business merges with or takes over a business in a completely different industry. This is also known as diversification.
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A sole trader is a business owned by one person.
A sole trader is a business owned by one person.
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Limited liability means that the liability of shareholders in a company is limited to only the amount they invested.
Limited liability means that the liability of shareholders in a company is limited to only the amount they invested.
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Unlimited liability means that the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.
Unlimited liability means that the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.
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A partnership agreement is the written and legal agreement between business partners. It is essential for partners to have such an agreement, but it is not always recommended.
A partnership agreement is the written and legal agreement between business partners. It is essential for partners to have such an agreement, but it is not always recommended.
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Incorporated businesses are companies that have separate legal status from their owners.
Incorporated businesses are companies that have separate legal status from their owners.
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Shareholders are the owners of a limited company. They buy shares which represent part-ownership of the company.
Shareholders are the owners of a limited company. They buy shares which represent part-ownership of the company.
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Private limited companies are businesses owned by shareholders, but they cannot sell shares to the public.
Private limited companies are businesses owned by shareholders, but they cannot sell shares to the public.
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Public limited companies are businesses owned by shareholders, but they can sell shares to the public and their shares are tradable on the Stock Exchange.
Public limited companies are businesses owned by shareholders, but they can sell shares to the public and their shares are tradable on the Stock Exchange.
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An Annual General Meeting is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.
An Annual General Meeting is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.
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Dividends are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.
Dividends are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.
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A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the licence to operate this business from the franchisor.
A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the licence to operate this business from the franchisor.
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A joint venture is where two or more businesses start a new project together, sharing capital, risks and profits.
A joint venture is where two or more businesses start a new project together, sharing capital, risks and profits.
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A public corporation is a business in the public sector that is owned and controlled by the state (government).
A public corporation is a business in the public sector that is owned and controlled by the state (government).
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Business objectives are the aims or targets that a business works towards.
Business objectives are the aims or targets that a business works towards.
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Profit is the total income of a business (revenue) less total costs.
Profit is the total income of a business (revenue) less total costs.
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Market share is the percentage of total market sales held by one brand or business.
Market share is the percentage of total market sales held by one brand or business.
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A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business.
A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business.
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Motivation is the reason why employees want to work hard and work effectively for the business.
Motivation is the reason why employees want to work hard and work effectively for the business.
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A wage is payment for work, usually paid weekly.
A wage is payment for work, usually paid weekly.
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Time Rate is an amount paid to an employee for one hour of work.
Time Rate is an amount paid to an employee for one hour of work.
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Piece Rate is an amount paid for each unit of output.
Piece Rate is an amount paid for each unit of output.
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A salary is payment for work, usually paid monthly.
A salary is payment for work, usually paid monthly.
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A bonus is additional amount of payment above basic pay as a reward for good work.
A bonus is additional amount of payment above basic pay as a reward for good work.
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Commission is a payment relating to the number of sales made.
Commission is a payment relating to the number of sales made.
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Profit sharing is a system whereby proportion of the company's profit is paid out to employees.
Profit sharing is a system whereby proportion of the company's profit is paid out to employees.
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Job Satisfaction is the enjoyment derived from feeling you have done a good job.
Job Satisfaction is the enjoyment derived from feeling you have done a good job.
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Job rotation involves workers swapping around and doing each specific task only for a limited time and then changing around again.
Job rotation involves workers swapping around and doing each specific task only for a limited time and then changing around again.
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Job enrichment involves looking at jobs and adding task that require more skills and/or responsibilities.
Job enrichment involves looking at jobs and adding task that require more skills and/or responsibilities.
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Team Working involves using groups of workers and allocating specific tasks and responsibilities to them.
Team Working involves using groups of workers and allocating specific tasks and responsibilities to them.
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Training is the process of improving a worker's skills.
Training is the process of improving a worker's skills.
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Promotion is the advancement of an employee in an organisation, for example, to a higher job/managerial level.
Promotion is the advancement of an employee in an organisation, for example, to a higher job/managerial level.
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Study Notes
Economic Problem
- A need is an essential good or service for living.
- A want is a desired good or service, not essential. Wants are unlimited.
- The economic problem is the limited resources to meet unlimited wants, creating scarcity.
- Factors of production are the resources needed to produce goods and services, and are in limited supply.
- Scarcity is the lack of sufficient goods and services to meet overall wants.
- Opportunity cost is the value of the next best alternative foregone when a choice is made.
- Specialisation occurs when individuals or businesses concentrate on their areas of expertise.
- Division of labour is the breakdown of a production process into separate tasks.
Production
- Businesses combine factors of production to create goods and services.
- Added value is the difference between the selling price and the cost of bought-in materials.
- The primary sector extracts and utilizes natural resources.
- The secondary sector manufactures goods using raw materials.
- The tertiary sector provides services.
- De-industrialization is the decline of the secondary sector.
- A mixed economy incorporates both public and private sectors.
Capital and Entrepreneurship
- Capital is investment in a business.
- An entrepreneur organizes, operates, and takes the risks of a new venture.
- A business plan outlines the business's goals and operations.
- Capital employed is the total value of capital invested.
- Internal growth is expanding existing business activities.
- External growth is taking over or merging with other businesses (integration).
- A takeover/acquisition is buying another company.
- A merger is combining two businesses.
- Horizontal integration is merging with a competitor at the same production stage.
- Vertical integration is merging with a competitor at a different stage of production (forward or backward).
- Conglomerate integration is merging with a different industry.
Business Types
- Sole trader business owned by one person.
- Limited liability restricts shareholder responsibility to the investment amount.
- Unlimited liability holds business owners fully responsible for debts.
- Partnership is a business owned by two or more people.
- An unincorporated business lacks separate legal status from its owners.
- An incorporated business (company) has separate legal status from owners.
- Shareholders own part of a limited company.
- Private limited companies sell shares privately.
- Public limited companies sell shares publicly.
- Annual General Meeting (AGM) is required for shareholder participation at the company level.
Business Finances and Operations
- Dividends are payments to shareholders from company profits.
- Franchise is using another successful business's brand and operating methods.
- Joint venture is a temporary business collaboration.
- A public corporation is wholly owned by a state (or public).
- Business objectives are the goals a business aims for.
- Profit is total revenue minus total costs.
- Market share is the proportion of total market sales held by a business/product.
- A social enterprise has both social and profit goals.
- Stakeholders are groups with an interest in a business.
- Motivation is why employees are driven to perform.
- Wage / salary is payment for work.
Business Management
- Time rate, piece rate: methods of payment based on time or output.
- Salary, bonus, commission: other forms of salary payment for different criteria.
- Profit sharing: a portion of profit distributed to employees.
- Job satisfaction: employee enjoyment of the job.
- Job rotation, job enrichment: methods for improving job satisfaction.
- Team working: involves group work.
- Training: improving employee skills.
- Promotion: advancement within an organization.
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Description
This quiz explores the fundamental concepts surrounding economic problems, such as needs, wants, scarcity, and factors of production. Additionally, it covers topics like opportunity cost, specialization, and the division of labor, providing a foundational understanding of economic principles in production. Test your knowledge and deepen your understanding of these essential economic concepts.
