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Questions and Answers
What is primarily defined as the organised effort of individuals to produce and sell products for profit?
Which of the following is considered a finished product?
What contributes to higher levels of economic growth and wealth according to the nature of business?
Which type of business operates within just one country?
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What is the role of innovation in business?
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What is the primary function of the secondary sector in the industry classification?
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Which legal structure is characterized by the owner being personally responsible for all the business's debts?
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Which sector includes services such as computing, education, and finance?
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What distinguishes a multinational corporation (TNC) from other types of businesses?
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Which of the following is NOT a characteristic of an incorporated business?
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Study Notes
Role of Business
- Organised effort to produce and sell goods and services for profit, meeting individual needs and wants.
- Goods are tangible items, while services are intangible activities performed for others.
- Finished products are ready for consumers to purchase and use.
- Production involves combining resources to create products that satisfy customer demands.
Nature of Business
- Profit: Reward for businesses fulfilling consumer needs and wants.
- Income: Revenue generated for owners, shareholders, and employees.
- Choice: Consumers enjoy the freedom to select products at competitive prices.
- Innovation: Research and development lead to improvements in existing products and the creation of new ones.
- Entrepreneurship & Risk: Businesses enable individuals to transform ideas into livelihoods, though associated risks exist.
- Wealth: Business activities contribute to economic growth, increasing wealth in society.
- Quality of Life: A diverse range of products improves living standards.
Types of Business
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Classification by Size:
- Micro: 1-5 employees (e.g., corner store, hairdresser).
- Small: 20-199 employees, medium market share in local regions (e.g., real estate).
- Large: 200+ employees, significant market share, often multinational (e.g., QANTAS, Woolworths).
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Geographical Spread:
- Local: Limited to surrounding areas, serving nearby consumers.
- National: Operates within one country.
- Global/TNC: Multinational corporations with operations in multiple countries.
Industry Classification
- Primary (7.6%): Involves natural resource collection (e.g., agriculture, mining).
- Secondary (20.5%): Processes primary sector outputs into finished products (e.g., manufacturing).
- Tertiary (17%): Service-oriented businesses (e.g., retail, healthcare).
- Quaternary (39%): Knowledge-based services that transfer and process information (e.g., finance, education).
- Quinary (15.9%): Home-based services (e.g., hospitality, childcare).
Legal Structure
- Unincorporated: No separate legal existence from owners (e.g., sole trader, partnership), and business ceases with owner’s death.
- Incorporated: Separate legal entity from owners, protecting personal assets.
- Unlimited Liability: Owners personally responsible for business debts.
- Limited Liability: Owners’ financial liability limited to their investment in the company shares.
Sole Trader
- Single owner-operated business model.
- Advantages include low entry costs, simplicity, complete control, and minimal setup expenses.
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Description
This quiz covers the fundamental concepts of business, including the production of goods and services. Understand how businesses operate to meet individuals' needs and wants, and differentiate between goods, services, and finished products. Ideal for students looking to grasp the basics of business.
