1.Introduction to business activity

-Needs and wants-The purpose of business activity-The objectives of non-profit making activity private and public enterprice-The concept of adding value

Business produce goods and services

The products of business

Goods Services

Goods are things you can touch and use, such as pencil and hat

Services are things that people do for you , such as selling you goods in a shop or cutting your hair

Needs and wants

Needs -Needs are things that we must have in order to live

- Wants are items that we would like to have , although we won`t die without them-Make life more enjoyable

WANTS

Demand or effective demand

DEMANDWhen you want something , you create a demand for it . You cannot satisfy your want unless» you have the money and» you are willing to pay for it

Effective demandPeople create effective demand when enough of them want something and are able and willing pay for itA other word, demand for a product that is backed up by an ability and willingness to pay for it

The purpose of business activity

The sector of business consisting of businesses owned by private individuals or groups, called private sector

Business owned and run by the

government are public

enterprices.They are called public sector

Non-profit-making organisations include

charities and voluntary organisations.These are set

up to fulfill a perceived social need or provide help

to specific section of the community

Deciding what to produceThere are enough of some resources ,

such as air , to satisfy everybody`s needs . But most resourse are not plentiful enough for this.Since the resource needed to produce goods and services, a choice must be made as to what to produce from them

Resource is items of limited ability that can be used in human activity

COST AND OPPORTUNITY COST

Opportunity cost-The cost of something In terms of the next best thing

Business activity and the factors of production

LAND Labour Capital Enterprise

Capital includes items used in the production of goods and services that made by people

Enterprice is the ability,skill and enthusiasm to take the risks involved in developing a business idea and gathering the appropriate recources

Labour is the effort or work provided by people

Adding valueAs the transformation – or production – process proceeds through various stages, gain added value to the raw materials each stage .When the product is finished , its value – and the price at which it will be sold - is more than the value of the factors of production used to make the product.Therefore the amount of value added to the product and the cost of all the resources used to produce the product

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