Topic 1

• What is the concept of creative destruction in economics?

  Organising factors of production to create and set up an enterprise
• How does technological change affect production costs for firms?

  It can result in improvements in efficiency and productivity, lowering costs of production
• What are the potential outcomes of technological change on goods and services?

  The quality and quantity of goods and services produced might improve
• Why have mobile phones become cheaper and of higher quality?

  Due to improvements in technology
• How has the market for VHS video tapes been affected by technological change?

  The development of DVDs, blu-rays, and downloadable films has destroyed the market for VHS video tapes
• What is the link between creative destruction and technological change?

  The process of creative destruction is linked to technological change
• Why are Small and Medium Sized Enterprises (SMEs) important in a competitive market?

  They create jobs, stimulate innovation and investment, and promote a competitive environment
• Who proposed the idea of 'creative destruction'?

  Schumpeter
• What does the idea of 'creative destruction' imply about new entrepreneurs?

  New entrepreneurs are innovative and challenge existing firms
• What happens to the least productive firms in a market according to Schumpeter's theory?

  They are forced to leave the market
• How does creative destruction affect the economy's productive potential?

  It results in an expansion of the economy’s productive potential
• What role do entrepreneurs play in business development?

  They create ideas and put them into action by taking risks
• What factors might entrepreneurs consider when making business decisions?

  Past mistakes, potential profitability, and potential gaps in the market
• How do personal circumstances affect an entrepreneur's decisions?

  They must consider what capital they might have to give up and the implications for themselves
• What are some ways entrepreneurs can expand their business?

  Widening their product range, taking over or merging with another firm, or employing more workers
• What must entrepreneurs ensure when growing their business?

  They have the necessary capital and that any means of growing is sustainable
• What is the primary incentive for entrepreneurs to take risks?

  Profit
• Why do entrepreneurs seek to maximize their profits?

  To avoid loss and gain profit, which motivates them to innovate
• How can entrepreneurs reduce their production costs?

  By improving the quality of their products
• What are the key aspects of the process of creative destruction?

  • Organizing factors of production to create enterprises
  • Technological change leading to efficiency and productivity improvements
  • Development of new products and markets
  • Destruction of existing markets

  
• What are the roles and impacts of Small and Medium Sized Enterprises (SMEs) in the economy?

  • Create jobs
  • Stimulate innovation and investment
  • Promote a competitive environment
• What are the steps entrepreneurs take to develop a business?

  1. Create ideas and take risks
  2. Consider past mistakes and potential profitability
  3. Assess personal circumstances and capital
  4. Explore expansion options (product range, mergers, workforce)
  5. Ensure sustainability of growth

  
• What is the primary incentive for an entrepreneur to take risks?

  Profit
• How does profit motivate entrepreneurs to innovate?

  Profit motivates entrepreneurs to avoid loss and seek innovation
• What actions can entrepreneurs take to maximize their profits?

  Reduce production costs and improve product quality
• What are the factors of production that entrepreneurs bring together?

  Land, labour, capital, and enterprise
• What are some non-financial motives for entrepreneurs?

  • Ethical stance and social entrepreneurship
  • Independence and working from home
  • Leaving a personal legacy
• How might an entrepreneur's ethical stance influence their motivation?

  They may want to have a positive impact on the world
• What is an example of a product developed by entrepreneurs to improve living standards?

  A 'drinkable book'
• In what way do entrepreneurs have a greater impact on society compared to employees?

  Entrepreneurs can create products and services that significantly affect societal standards
• What is one motive for entrepreneurs related to their personal lives?

  Leaving a personal legacy
• How does being an entrepreneur provide flexibility in work?

  Entrepreneurs can choose when and where to work
• What are the benefits of working from home for entrepreneurs?

  It allows for more control over their lives and time with family
• Why is freedom considered a strong incentive for many entrepreneurs?

  It allows them to work at their will and maintain independence
• What are the factors of production in economics?

  Land, labour, capital, and enterprise
• What is the role of entrepreneurs in the economy?

  They bring together the factors of production to make a profit
• What does the acronym CELL stand for in the context of factors of production?

  • Capital
  • Entrepreneurship
  • Land
  • Labour
• What is capital in the context of factors of production?

  Physical goods used in the production process, including fixed and working capital
• What are the two types of capital mentioned?

  Fixed capital and working capital
• What is the reward for capital in the production process?

  Interest from the investment