A. From the following list, decide which items are human needs and which are wants: (explain briefly the reasons for your decisions)
When we talk about needs we don’t have to think about the things that we would like to have but we have to think about the necessary things. This list includes many items that many people have, but if we have to choose there are some things that we would have to take away; like a luxury house, a coke, a car and designer jeans. All of the things that I have named are not needs but are things that we always have in mind.
By the other side we have the things that are essential, like a shelter, clean water and clothing. This three things are things that we cannot live without. What would happen if we don’t have a shelter? We would be cold, we would live with all the dirt in the street and we would get very sick. This also goes with the clothing. The clean water is something that the human body reauires to live and to work.
B. Explain what is meant by scarcity when referring to the economic problem.
People can’t differentiate a need from a want. A need is something essential for a living, but a want is something that we would like to have. People do not have just one want because wants are unlimited, and when we run out of resources, scarcity is created.
C. List the four factors of production and explain briefly why each is necessary for production to take place.
-Land: the land is needed to extract the natural resources that have to be used when producing.
-Labour: the labour is the number of people that work to produce something. If there are not people working then there won’t be a product.
-Capital: the capital is needed to afford the essential needs for the production, without capital there wouldn’t be machinery, equipments and finance.
D. Explain, with the aid of an example, what the term of opportunity cost means to a consumer.
The opportunity cost is present when we talk about needs and specially in wants. The consumer has to buy many things and it also has to afford his special wants, and for this he has to make choices and think which things he may or not buy, the things he thinks that would be more necessary and also the things that he can afford, and this leads to opportunity cost.
E. Give two other examples of opportunity cost that would affect groups other than consumers.
The opportunity cost can affect a business when it needs more factors of production and its resources can’t afford them. If someone that has a business has to buy new machinery and he ends up earning less money than in what he spent then he won’t benefit.
A man that sells very expensive merchandise will not have much consumers because this want couldn’t be afforded by many people because of the opportunity cost and he won’t earn much money.
F. Explain what is meant by division of labour.
The division of labour is a process to make products easier, quicker and better. The division of labour includes in giving each worker a special task that they will have to do repeat daily.
G. Why is a business likely to increase output if it adopts division of labour?
Because workers would end their special task quicker due to the training they have and because the workers wouldn’t have to move from one side to the other, they would stay in a special place and time wouldn’t be wasted.
H. List four tasks involved in the making of cakes that coukd be given to different workers through division of labour.
One would have to buy the ingredients, other would have to pour them, another would bake them and finally the last worker would have to sell it.
I. State three benefits to society of business activity.
*It employs people and gives them a productive life
*It produces goods and services
*It combines scarce factors
J. What is meant by added value?
The added value is the additional money that people have to pay when buying something. This money that you pay is the money that a business will earn, the money that will pay the workers and the machinery and also the money that makes business.
K. Identify and explain two ways in which a retailer of clothes could add value to their products. (Hint: the answer is not to buy more expensive clothes for the shop as this will not necessarily add value.)
-Buying worse materials to pay less money for it.
-Making clothes with a machine instead of handmade it.
-Increase the price.