What is the primary purpose of a business?
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D. To satisfy customer needs and wants. This is the fundamental purpose of any business, as it drives all other activities, including profit-making.
Which of the following is an example of a want rather than a need?
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D. A designer handbag. Needs are essential for survival, while wants are desires for items that are not essential.
What is the opportunity cost of choosing to study for an extra hour instead of watching TV?
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A. The enjoyment of watching TV. Opportunity cost is the value of the next best alternative that you give up when making a decision.
Why is specialisation important in business?
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B. It enables businesses to produce goods and services more efficiently. Specialisation allows workers to focus on specific tasks, improving their skills and productivity.
What does the concept of adding value mean in business?
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C. Transforming raw materials into finished products that customers are willing to pay for. Adding value involves creating something that customers perceive as more valuable than the sum of its parts.
Which of the following is an example of a business activity that adds value?
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B. A baker turning wheat into bread. The baker transforms the raw material (wheat) into a finished product (bread) that customers are willing to pay for, thus adding value.
What is the main advantage of a business adding value?
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C. It makes the business more competitive. By adding value, a business can differentiate its products from competitors, making it more attractive to customers.
Which of the following is an example of a business in the primary sector?
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C. A fishing company. The primary sector involves the extraction of raw materials from the earth, such as fishing, farming, and mining.
Why might the importance of the primary sector decrease in a developing economy?
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B. Because the economy is shifting towards manufacturing and services. As economies develop, they often move away from primary sector activities towards secondary (manufacturing) and tertiary (services) activities, which offer higher value and more job opportunities.
Which of the following is an example of a business in the secondary sector?
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B. A car manufacturer. The secondary sector involves the transformation of raw materials into finished goods through manufacturing processes.
What is the main difference between the private sector and the public sector?
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B. The private sector aims to make a profit, while the public sector aims to provide services to the public. Private sector businesses are owned and operated by individuals or groups of individuals, while public sector organisations are owned and operated by the government.
Which of the following is an example of a public sector organisation?
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B. A government-run school. Public sector organisations are owned and operated by the government and provide services to the public, such as education, healthcare, and public transportation.
What is the main advantage of the private sector?
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C. It is more efficient and innovative than the public sector. Private sector businesses are driven by the need to make a profit, which encourages them to be more efficient and innovative in their operations.
Why might a business choose to remain small?
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C. To maintain a personal touch with customers and employees. Some businesses choose to remain small because they value the close relationships they have with their customers and employees, which can be lost as a business grows.
Which of the following is a common reason for business failure?
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A. Lack of management skills. Poor management can lead to a range of problems, such as ineffective decision-making, poor financial management, and low employee morale, all of which can contribute to business failure.
Why are new businesses at a greater risk of failing than established businesses?
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A. They have less experience and fewer resources. New businesses often lack the experience, financial resources, and customer base that established businesses have, making them more vulnerable to failure.