Chapter 1

• Need: A good or service which is essential to living
• Want: a good or service which people would like, but is not essential for living.
• Business activity: the process of producing goods and service to satisfy consumer demands
• Economic problem: unlimited wants cannot be met because there are limited factors of production. This causes scarcity
• Scarcity: there are not enough goods and services to meet the wants of the population
• Factors of production: he resources needed to produce goods and services- land, labour, capital and enterprise
• Opportunity cost: The benefit that could've been gained from an alternative use of the same resource.
• Specialisation: people and businesses concentrate on what they are best at.
• Division of labour: production is divided into separate tasks and each emplyee does just one of them
• Consumer goods: products which are sold to the final consumer. They can seen and touched, for example computers and food.
• Consumer services: non-tangible products such as insurance services and transport
• capital goods: physical goods such as machinery and delivery vehicles.