Business Activity (Copy)
- Needs
- Things essential for living
- Wants
- Things people desire to have but are not essential for living
- Scarcity
- Limited factors of productions available that have to satisfy unlimited wants
- Economic problem
- Scarcity is never ending
- FOPs will never exceed wants
- Scarcity is never ending
- Factors of Production
- Land
- Natural resources
- Labor
- Human efforts
- Capital
- Human made goods used in production
- Enterprise
- Skill and ability to take risks and decisions to ensure that everything can be brought together to produce products.
- Land
- Limited resources
- Opportunity Cost
- Choose one thing over another
- The next best option forgone to get something
- Opportunity Cost
- Specialization
- Doing things that you are best at and excelling at them perfectly
- Division of Labor
- Break down production process into multiple tasks and then each worker does one of those tasks
- Benefits: practice makes perfect, less time wasted changing places, cheaper and quicker to train at one skill
- Problems: Boring and replacement issues
- Break down production process into multiple tasks and then each worker does one of those tasks
- Purpose of Business Activity
- Provide a solution to people
- Satisfy wants and needs
- Produce products
- Goods and services
- Employ people
- Added Value
- Value is the difference between cost the raw materials and the price of the finished products
- Not the same as profit
- Other costs have to be included as well
- Why value addition is important
- Helps pay other costs
- Increase profits if we can raise the price more than the cost by bringing a change
- Examples
- Either increase selling price while keeping costs same
- Improve quality
- Packaging
- Store layout etc.
- Reduce Costs
- Better supply chain
- More efficient machinery or workers
- Either increase selling price while keeping costs same
