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IGCSE Business Activity Overview

The document outlines the fundamental concepts of business activity, including the definition of business, the economic problem of limited resources versus unlimited wants, and the factors of production: land, labor, capital, and enterprise. It discusses the importance of specialization and division of labor in maximizing efficiency and the concept of added value in business operations. Additionally, it addresses the implications of scarcity, choice, and opportunity cost in economic decision-making.

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Chloe Mirembe
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6 views17 pages

IGCSE Business Activity Overview

The document outlines the fundamental concepts of business activity, including the definition of business, the economic problem of limited resources versus unlimited wants, and the factors of production: land, labor, capital, and enterprise. It discusses the importance of specialization and division of labor in maximizing efficiency and the concept of added value in business operations. Additionally, it addresses the implications of scarcity, choice, and opportunity cost in economic decision-making.

Uploaded by

Chloe Mirembe
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

IGCSE Business Studies

Section 1: Understanding Business Activity

Chapter 1: Business Activity


Objectives:
1. What is meant by a business
2. The economic problem of unlimited wants and
limited resources
3. The factors of production
4. The development of economic activity and the use of
specialization
[Link] different groups involved in business activity.
6. The purpose of Business Activity.
- Business is any activity that involves production of goods and
services with an aim of satisfying human needs.

Business activities may include:


-Production
-Manufacturing
-Processing
- Provision of services
Classify these.
Needs Wants
Needs and Wants
 Wants
› Non-essential goods
and services that people
would like to have.
› Interests & Tastes
 Needs
› Essential goods or
services necessary for
living.
› Satisfy the basic things
for life.
Make your list

Needs Wants

Limit your wants to no more than 25 items please!


Economic Problem
Essential Questions:
1. What are the four factors of production?
2. How do the basic factors of production influence the choices
made by producers and consumers?
3. What effects do limited natural resources have on the choices
made by producers and consumers?
4. How are the four factors of production used in satisfying wants
and needs?
5. How does scarcity affect the production of goods and services?
6. How do the four factors of production affect products you use
every day?
Factors of production
-Factors of production are those resources needed to produce
goods and services.
- There are four factors of production and they are in limited supply.
- They include:
a) Land
b) Labour
c) Capital
d) Enterprise
Land

All of the natural resources provided by nature


Labour

All people’s efforts to make products


Capital

All finance, machinery & equipment in manufacturing products


Enterprise

All people that have skills & have risk-taking ability  factors of production  produce
good or service
Factors of production and their rewards
- A reward is the payment given to a factor of production.
SCARCITY, CHOICE AND OPPORTUNITY COST

Unlimited Limited
Wants + Resources = Scarcity
SCARCITY – a situation where human have less resources
and unlimited human wants and needs.
CHOICE – Deciding the need or want to satisfy first because
you cant satisfy all at once.
Opportunity cost – the next best alternative given up by
choosing another item.
Making the best use of limited resources

• Specialization / Division of Labour.

• Specialization - occurs when


people/labour concentrates on what
they are best at.
• Division of labour - Production Process
is divided into different tasks and each
task is given a worker.
ADDED VALUE
- This is the difference between the selling price of a product and
the cost of buying the materials to make the products.
Why added value important?
- So that the business can be able to pay business costs
- So that the business may be able to make a profits.
HOW COULD BUSINESSES INCREASE ADDED VALUE
- Increasing selling price but keep the cost of materials the same
- Reduce the cost of materials but keep price the same.

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