7115 · 1.1
Business activity flashcards
Revision flashcards for Cambridge 7115 Business activity (syllabus 1.1). Flip, recall, then mark a real past-paper question.
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Factors of production?
Land, labour, capital, enterprise — rewards: rent, wages, interest, profit.
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Adding value?
Difference between selling price and cost of materials/components bought in.
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Opportunity cost?
Benefit of the best alternative given up — central to business choices.
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Primary sector?
Extracting raw materials — farming, fishing, mining.
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Secondary sector?
Manufacturing and construction — transforms raw materials.
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Tertiary sector?
Services — retail, transport, banking, tourism.
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Enterprise factor?
Organises other factors, takes risk — reward is profit (1.1.2).
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Link to 4.1.1?
Transformation process: inputs → process → outputs with value added.
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What is 'Capital' as a factor of production?
Man-made resources used in the production process to create other goods and services. Examples include machinery, tools, vehicles, and buildings. It is distinct from money (financial capital).
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How is 'Added Value' calculated?
The selling price of a finished product minus the cost of the bought-in materials and components used to make it. Formula: Price - Cost of bought-in materials.
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Explain the role of 'Enterprise' as a factor of production.
Enterprise is the skill and risk-taking ability of an entrepreneur who brings the other three factors of production (Land, Labour, Capital) together to produce a good or service. The reward for successful enterprise is profit.
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What is the 'Quaternary Sector' of industry?
A sub-group of the tertiary sector focused on knowledge-based and information-based services. It includes activities such as scientific research, information technology (IT), consultancy, and financial planning.
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Provide a business example of 'Opportunity Cost'.
A clothing retailer spends its £50,000 marketing budget on a television advert instead of a social media campaign. The opportunity cost is the potential customer engagement and sales that were forgone from the social media campaign.