3.1.1 - Purpose of a Business

• What is retail?

  Retail is the sale of goods bought by end customers.
• What is wholesale?

  Wholesale supplies retailers.
• How is profit calculated?

  Profit is calculated as sales revenue minus costs.
• What is the relationship between retail and wholesale in the supply chain?

  Retail sells directly to end customers, while wholesale supplies the retailers.
• What are the four factors of production

  Land Labour Capital Enterprise
• What are the three business sectors

  Primary Secondary Tertiary
• Primary definition

  Producing raw materials which are extracted from nature
• Example of primary

  Metal Crops Fish
• Secondary definition

  Manufacturing goods which are made from raw materials and turned into finished goods
• Tertiary definition

  Providing services
• Example of secondary

  Bakery Clothing
• Examples of tertiary

  Supermarket Delivery companies
• What sector business sector would a hair salon be?

  Tertiary
• What business sector would Tesco be?

  Tertiary
• Defintion of tangible

  Can be touched, used and stored
• Defintion of intangible

  Cannot be stored
• Is a service tangible or intangible?

  Intangible
• Is a good tangible or intangible?

  Tangible
• Land definition

  The land where the business is based, but also includes the natural resources on or under that land
• Labour definition

  The people working in the business
• Capital definition

  The buildings and machinery needed for the business
• Enterprise definition

  The entrepreneur who set up the business
• Two reasons why someone would set up a business

  A gap in the market

  To be their own boss
• What factor of production does a manager fall into

  Labour
• What factor of production does a farm fall into

  Land
• What are needs in the context of survival?

  Products I need in order to survive
• How are wants defined?

  Products I want to have but don't need
• What are goods?

  Physical items
• What are services?

  Actions done for you by someone else
• What is opportunity cost?

  The value of the next best alternative, lost when we make a choice
• If I choose option c which generates £1000, what is the opportunity cost if option b generates £100?

  £100
• What are the key differences between needs, wants, goods, and services?

  • Needs: Essential products for survival
  • Wants: Non-essential products desired
  • Goods: Tangible physical items
  • Services: Intangible actions performed for others
• What is the definition of opportunity cost?

  Opportunity cost is the value of the next best alternative that you give up when making a choice.