Business Studies - Enterprise
Learning Objectives:
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Explain the purpose of business and describe the nature of economic activity.
Identify the four factors of production and explain how businesses add value.
Analyze business choices and explain opportunity cost in economic decision making.
In today's constantly changing world, understanding business fundamentals is necessary.
The purpose of business Activity:
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A business is an organization that uses resources to meet the needs of the customers by
providing products or services they desire.
Factors of production:
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Land - Natural resource: Physical land for building and operations.
Labor - Human resource: manual, skilled, knowledge.
Capital - Physical resource: Financial capital, infrastructure such as building and
facilities.
Enterprise - Entrepreneurial resources: risktaking individuals, that combines the other
factors of production into a unit capable of producing goods and services.
The concept of Adding Value
Formula - Selling Price - Cost of brought in Materials.
Adding value is not the same as profit. It is actually the difference between the cost of
purchasing bought-in materials and the price the finished goods are sold for.
—-------------------------------------------------------------------------------------------------------------------------Economic Problem : Scarcity and Choice - Unlimited human desires versus limited resources.
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