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Questions and Answers

What is the primary focus of the secondary sector in an economy?

Extraction of natural resources

Manufacturing of goods (correct)

Farming and agriculture

Providing services to the community

Which of the following is NOT a characteristic of an entrepreneur?

Strategic

Complacent (correct)

Innovative

Resilient

What does industrialisation refer to?

The transformation of an economy to a mainly primary sector

The shift from a primary to a secondary sector economy (correct)

The process of increasing product prices

The decline in manufacturing jobs

What is a mixed economy?

An economic system combining both public and private sectors Signup and view all the answers

Which of the following would be a typical example of the tertiary sector?

Hotels and travel agencies Signup and view all the answers

What is one major disadvantage of being an entrepreneur?

Opportunity cost Signup and view all the answers

Which example best illustrates a business activity in the primary sector?

Fishing activities Signup and view all the answers

What is the primary purpose of a business plan?

To provide a roadmap for the organization's goals and operations Signup and view all the answers

What is one of the main benefits of having a business plan?

It helps gain finance Signup and view all the answers

Which of the following is NOT a reason governments support business startups?

To eliminate all existing businesses Signup and view all the answers

Which method is NOT used to measure business size?

Social media presence Signup and view all the answers

What type of growth involves a business expanding its existing operations?

Internal growth Signup and view all the answers

Which integration occurs when one business merges with another in the same industry but at different stages of production?

Vertical integration Signup and view all the answers

Why might a business owner want to expand?

To achieve lower average costs Signup and view all the answers

What is defined as the costs of starting a new business in a new industry?

Barrier to entry Signup and view all the answers

What analysis can be used to determine the level of sales needed to cover costs?

Break-even analysis Signup and view all the answers

What term describes the basic economic problem of having unlimited wants and limited resources?

Scarcity Signup and view all the answers

Which factor of production refers to the financial resources, machinery, and equipment needed to produce goods?

Capital Signup and view all the answers

What is the purpose of specialisation in business?

To focus on a task at which an individual or organization excels Signup and view all the answers

What does 'added value' represent in a business context?

The difference between the cost of materials and the selling price Signup and view all the answers

Which of the following is NOT considered a disadvantage of specialisation?

Increased efficiency in production Signup and view all the answers

Study Notes

Business Activity

Needs are essential for living, while wants are desirable but not essential.
Scarcity is the basic economic problem; unlimited wants with limited resources to fulfill them.
Opportunity Cost is the value of the next best alternative forgone when making a decision.
Factors of Production are essential for producing goods and services.
Land encompasses natural resources, Labour is human effort, Capital is finance, machinery, and equipment, and Enterprise is the risk-taking element.
Specialization occurs when individuals/organizations focus on tasks where they excel.
- This increases efficiency and production speed.
- It also allows for quicker worker training and skill development, though it can lead to monotony and higher wage demands.
Business utilizes all factors of production to create goods and services satisfying human wants and needs.
Added Value is the difference between the cost of materials and the selling price, reflecting the value added during production.
- It is increased by reducing production costs, increasing product prices, or effective design and marketing.

Classification of Businesses

Primary Sector is involved in the extraction or use of natural resources.
Secondary Sector processes raw materials into manufactured goods.
Tertiary Sector provides services to individuals and businesses.
Industrialization refers to the shift from primary to secondary sector dominance.
De-Industrialization is the decline or removal of industrial activity.
Private Sector businesses are owned and run by private individuals.
Public Sector businesses are owned and operated by the government.
Mixed Economy combines private and public sectors.

Enterprise, Business Growth & Size

Entrepreneurs are individuals taking risks to establish and operate new ventures.
Benefits of Entrepreneurship include independence, personal fulfillment, potential success, and profitability.
Risks of Entrepreneurship include financial uncertainties, potential losses, and lack of experience.
Characteristics of successful entrepreneurs: Risk-takers, Innovative, Strategic, Enthusiastic, and Resilient.
Business Plan is a document outlining business objectives, operations, finances, and ownership details, crucial for gaining finance and reducing risk.
Government help for startups aims to reduce unemployment, increase competition, boost output, and benefit society.
Government assistance includes providing business ideas and support, premises, finance, labor, and research resources.
Measuring business size via number of employees, value of output or sales, and capital employed.
Measuring business size is useful for investors, governments, banks, employees, and competitors.

Business Growth

Business expansion is driven by profit maximization, increased status, lower average costs, and market share expansion.
Internal growth occurs by expanding within the existing business operations.
External growth involves acquisitions or mergers with other companies.
Takeover happens when one business buys another, incorporating it into the buyer's operations.
Merger is a voluntary agreement by two businesses to merge into one.
Horizontal Integration involves mergers or takeovers within the same industry at the same stage of production.
Vertical Integration involves mergers or takeovers within the same industry but at different stages of production (forward or backward integration).
Conglomerate Integration (diversification) involves acquisitions or mergers across different industries.
Break-Even Analysis determines the sales revenue required to cover all costs.
Decentralization involves breaking a company into smaller units.
Barriers to entry represent the costs of starting a new business in an industry.
Liquidity refers to the ease and speed with which assets can be converted into cash.