Economic Problem & Production
This is a thing that is essential for our survival, such as food, drink, shelter or clothes.
needs
This sector extracts and harvests natural resources such as farming, mining and fishing.
primary sector
This person has a business idea and is willing to take the financial risk of starting and managing a new business.
entrepreneur
A farmer quits his office job to start growing vegetables. The salary he gives up from the office job is called this.
opportunity cost
This exam skill is about showing you know facts, definitions and key terms, for example: “State two benefits of being a sole trader.”
knowledge
This word means “a situation of not having enough resources to meet all wants,” and it is the key economic problem.
scarcity
This sector provides services such as supermarkets, schools, airlines and restaurants.
tertiary sector
Being innovative, a risk-taker, motivated, multi-skilled and good at networking are all characteristics of this type of person.
successful entrepreneur
A factory that turns raw cotton into T-shirts belongs to this sector of industry.
secondary sector
This exam skill is about taking your business knowledge and linking it to the business in the case study, for example: “Explain one way this particular café could attract more customers.”
application
This term means “the best alternative foregone” when a choice is made.
opportunity cost
This type of economy is one where resources are owned and controlled by both the government and private individuals/companies.
mixed economy
This detailed document outlines the purpose and aims of a business and is used to persuade lenders or investors to finance it.
business plan
In a factory, one worker only cuts the materials, another only assembles them, and another only checks quality. Each worker repeating one task again and again is an example of this.
specialisation (or division of labour)
This exam skill involves “breaking down” a business problem into causes and effects, often using connectives like “because,” “therefore” and “this leads to.”
analysis
Land, labour, capital and enterprise together are called this.
factors of production
This part of the economy is owned and controlled by the government and aims to provide accessible and affordable services, not mainly profit.
public sector
This is one way to measure business size, based on how many people the business employs; one limitation is that some firms use more machinery and fewer workers.
number of employees
In a mixed economy, this group decides how to provide key services like public hospitals, state schools and public transport.
government
This exam skill is about making a judgment or decision, often using phrases like “overall,” “however,” and “in the long run,” and justifying which option is best.
evaluation
This term is the difference between selling price and the cost of input materials; it is not the same thing as profit.
added value
As a country becomes more developed, production usually shifts away from the primary sector towards these two sectors.
tertiary and quaternary sectors
This problem of business growth is defined as an increase in average costs as a result of increased output, often caused by poor coordination or communication in a large firm.
diseconomies of scale
A supermarket chain buys a large dairy farm so it can control its milk supply and reduce its costs. This type of growth is called this.
vertical integration (backward vertical integration)
A question says: “Discuss whether X Ltd should choose bank loan or selling shares as a source of finance. Justify your answer.” Name the highest exam skill the question is testing.
evaluation