Purpose of Business Activity
Key Ideas Before Understanding Business
People always have unlimited wants.
The four factors of production (land, labour, capital, enterprise) are limited.
Because of limited resources and unlimited wants, there is scarcity.
Scarcity forces people to make choices, which leads to opportunity cost.
Specialisation helps improve efficiency when using resources.
Where Business Activity Fits In
Businesses exist to combine the factors of production and create products that satisfy people’s wants.
Types of Products
Goods – Physical items (car, shoes, phone).
Services – Non-physical activities (banking, tourism, insurance).
Types and Sizes of Businesses
Can be small (one person) or large (thousands of employees).
Can operate in one country or many countries.
Can be privately owned or government-owned.
Ownership can be by a single person or many shareholders.
Common Purpose of All Businesses
No matter the size or ownership, all businesses:
Combine factors of production
To produce goods or services
That satisfy people’s wants