Understanding Business

Question 1

What is the difference between a good and a service?

Answer 1

A service is intangible

While goods are tangible

Question 2

What is an example of a service?

Answer 2

Teaching or childcare

Question 3

What is an example of a good?

Answer 3

A chocolate bar or car

Question 4

What are the four factors of production?

Answer 4

Land, Capital, Labor, Entrepreneurs

Question 5

What is the land?

Give an example

Answer 5

Land is natural resources, not created by human effort.

Trees are an example

Question 6

What is capital?

Give an example

Answer 6

Capital are the tools equipment and factories used in production.
Tractors are an example

Question 7

What is labor?

Answer 7

Labor includes people and all their effort and abilities.

Question 8

What are entrepreneurs?

Answer 8

Entrepreuners are individuals who start a new business or bring a product to market

Question 9

Name 4 qualities an entreprenuer should have

Answer 9

Communication Skills
Finance Skills
Motivational Skills
Risk Taker

Question 10

What are the three sectors of industry?

Answer 10

Primary, Secondary and Tertiary

Question 11

What is the primary sector of industry?

Answer 11

The primary sector develops natural resources, like timber.

Question 12

What is the secondary sector of industry?

Answer 12

Uses primary extracted materials to create finished products

Question 13

What is the tertiary sector of industry?

Answer 13

Provides services such as retailing and distribution

Question 14

What is the quaternary sector?

Answer 14

Provides services based around IT

Question 15

What are the 3 sectors of economoy?

Answer 15

Private, Public, Third

Question 16

What is in private economy?

Answer 16

Private Limited, Public limited, Franchise, Multinationals

Question 17

What is in public economy?

Answer 17

National Gov, Local Gov

Question 18

What is in third economy?

Answer 18

Charity, Social Enterprise

Question 19

What is a private limited?

Answer 19

Shops, hairdressers, joinery, small to medium businesses

Question 20

What are some advantages of Private Limited?

Answer 20

A:Owners have limited liability
A:Ownership not lost
A:Business can retain a close knit friendly feel with customers

Question 21

What are some disadvantages of Private Limited?

Answer 21

D:Profits split
D:Shares can’t be sold on stock market
D:Legal process and documents need to be completed

Question 22

What are some advantages of PLC?

Answer 22

A:Easier to borrow money
A:Potential to dominate markets

Question 23

What are some disadvantages?

Answer 23

D:Divdends shared
D:Controls can be lost

Question 24

What is a franchise?

Answer 24

A franchise is a business opportunity that allows the franchisee to start a business by legally using someone else’s name, expertise, ideas and processes

Question 25

What is an advantage and disadvantage of a franchiser?

Answer 25

Advantage:Low risk as Franchisee invest majority of money
Disadvantages:Only a share of profits is received

Question 26

What is an advantage and disadvantage of a franchisee?

Answer 26

Advantage:Benefits from national advertisements
Disadvantage:Royalties have to be paid

Question 27

What is a multinational?

Answer 27

Businesses that operate in more than one country.

Question 28

What are some advantages of a multinational?

Answer 28

Wages and materials are cheaper.
Can avoid quotas and tariffs
Can help create a global brand.

Question 29

What are some disadvantages of a multinational?

Answer 29

Language barriers.
Cultural differences.
Time differences hinder communication.