basics

• What is the primary purpose of businesses in the economy?

  To provide goods or services
• How are inputs and outputs defined in a business context?

  Inputs are resources used in production, and outputs are the goods or services produced
• What does it mean for a business to add value during production?

  It means the selling price of an item is higher than the cost of all resources used to make it
• What is a business defined as?

  Any organization that makes goods or provides services
• What types of businesses exist in the UK?

  Small firms owned by self-employed individuals and large companies employing thousands
• What are goods and services?

  Goods are physical products, while services are non-physical items
• What are customer needs?

  Customer needs are the wants and desires of buyers
• How many businesses start each year?

  Nearly half a million businesses
• What is a business startup?

  A new firm operating in a market for the first time
• What is the majority size of businesses in the service sector?

  The vast majority are very small businesses
• How do businesses acquire the products they need?

  By buying from suppliers
• Who is referred to as a consumer?

  The individual who uses the product
• How can customers and consumers differ?

  Parents may buy a pen for their children, making them customers, while the children are the consumers
• What is a market?

  A place where buyers and sellers meet to trade products
• What are examples of markets?

  A high street shop or a website
• What does it mean for businesses to be in competition?

  They offer similar products to attract customers
• What are inputs in the context of production?

  Resources such as raw materials, equipment, buildings, and staff
• What is production in a business context?

  The activity of using resources to make goods and services
• How does a business add value?

  By ensuring the selling price is higher than the cost of resources used
• What are the three main types of industry in which firms operate?

  • Primary production: Acquiring raw materials
  • Secondary production: Manufacturing and assembly
  • Tertiary production: Commercial services supporting production
• What is primary production?

  It involves acquiring raw materials through extraction
• What are examples of primary production activities?

  Mining metals, drilling oil, and fishing
• What is secondary production?

  It involves converting raw materials into components and assembling products
• What are examples of secondary production activities?

  Making plastics from oil and building houses
• What is tertiary production?

  It refers to commercial services that support production and distribution
• What are examples of tertiary production activities?

  Insurance, transport, and advertising services
• What does the chain of production illustrate?

  • Interdependence among firms
  • Reliance on other businesses for raw materials, components, or distribution