1.1.1+Business+Activity+as+a+means+of+adding+value+and+meeting+customer+needs.

1.1.1 Business Activity as a means of adding value and meeting customer needs.

If a business is to succeed it needs customers. But why would you buy something from a business? Basically because they can provide you with something you want. For example I want to buy something from Taobao but I don't read Chinese. I can pay someone to buy the products for me! Amazing eh? This business succeeds because it adds value-it makes my life better/easier. [|Student activity] Read and make notes from this

Plenary Video: What is a business?

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Needs wants and scarcity The purpose of economic and business activity It is often said that the central purpose of economic and business activity is the production of goods and services to satisfy consumer’s needs and wants i.e. to meet people’s need for consumption both as a means of survival but also to meet their ever-growing demand for an improved lifestyle or standard of living. The basic economic problem is about scarcity and choice since there are only a limited amount of resources available to produce the unlimited amount of goods and services we want.

Activity: Read textbook and make notes on resources/factors of production (P2 3rd edt.)

Class Discussion What is the difference between wants and needs?

Opportunity Cost There is a well known saying in economics that “there is no such thing as a free lunch!” Even if we are not asked to pay a price for consuming a good or a service, scarce resources are used up in the production of it and there must be an opportunity cost involved. Opportunity cost measures the cost of any choice in terms of the next best alternative foregone. Many examples exist for individuals, firms and the government.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Work-leisure choices: The opportunity cost of deciding not to work an extra ten hours a week is the lost wages foregone. If you are being paid £6 per hour to work at the local supermarket, if you choose to take a day off from work you might lose £48 from having sacrificed eight hours of paid work.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Government spending priorities: The opportunity cost of the government spending nearly £10 billion on investment in hospitals might be that £10 billion less is available for spending on education or the transport network.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Making use of scarce farming land: The opportunity cost of using arable farmland to produce wheat is that the land cannot be used in that production period to harvest potatoes.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Opportunity cost activity

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<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Classroom activity: P9 Activity 1.3

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Firms and individuals tend to specialise, for example a teacher specialises not only in teaching, but also specialises in teaching 1 or maybe 2 subjects. What are the benefits of specialisation? <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Division of labour is a particular type of specialisation. Read and make notes on this (P5 3rd edt)