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Worksheet 1

Business activity basics (AO1) Business activity 1 Match the following descriptions to the correct terms.

Needs Items we would like to have, but are not essential.

Wants It ems that we must have in order to live. 2 St ate whether the following statements are true or false. a The purpose of business activity is to make a profit for businesses. b Opportunity cost is the cost of something in terms of giving up the next best thing. c Specialisation means making unique items for each customer. 3 Co mplete the following sentence, selecting the right word for each gap.

scarcity unlimited limited goods

The economic problem is trying to meet wants but only having resources to produce all the and services to meet these wants. This leads to . Factors of production 4 Dr aw lines to link each factor of production with its correct description and example.

Factor D escription Ex ample

Land Pe ople who take risks to bring about activity Bu y new machinery Labour Bu ildings and inventory Fi sh from the sea Capital Space and resource obtained from the land Machine operator Enterprise People who make things Investors

5 Choose the correct word to complete the sentence.

Buying a new building increases businesses’ land/capital. Added value 6 Dr aw a diagram on the reverse of this worksheet to explain what added value is. Use the following information to help you. A food company buys materials for $2,000. It sells its products for $3,500. It spends $1,000 on wages and other costs. Sectors 7 Choose the correct words to explain how most economies are organised.

public charities private voluntary

Most economies are made up of two main sectors. The sector includes businesses that are owned and run by individuals. The sector is made up of organisations owned and run by the state. There is also a third sector, known as the non-profit making or sector, which includes organisations such as .