Revision Unit 1

A. From the following list, decide which items are human needs and which are wants: (explain briefly the reasons for your decisions)

  • Luxury house
  • shelter
  • coca-cola
  • car
  • clean water
  • designer jeans
  • clothing

B. Explain what is meant by scarcity when referring to the economic problem.

C. List the four factors of production and explain briefly why each is necessary for production to take place.

D. Explain, with the aid of an example, what the term of opportunity cost means to a consumer.

E. Give two other examples of opportunity cost that would affect groups other than consumers.

F. Explain what is meant by division of labour.

G. Why is a business likely to increase output if it adopts division of labour?

H. List four tasks involved in the making of cakes that coukd be given to different workers through division of labour.

I. State three benefits to society of business activity.

J. What is meant by added value?

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.)


  • Luxury house

Want. Luxuries a want. Most people around the  world live in an ordinary house and are perfectly fine with it.

  • shelter

Need. It is a human necessity. You need to have a place where to sleep and be safe.

  • coca-cola

Want. If you´re thirsty you might drink water, not coca. Water is cheaper and even healthier.

  • car

Want. People need to transport, of course.,  but they do not need a car for it. They can use the public transport, such as the bus, train or subway.

  • clean water

Need. People have to drink clean water because of a health issue

  • designer jeans

Want. People need cloth but you can use simple cloth, that is cheaper and maybe spent that money on something more important.

  • clothing

Need. People must have cloths to protect from the cold and because they can not be naked on the streets, that would be unusual.


Scarcity is the lack of sufficient products to satisfy the total wants of the populations.


Land – You will need a place to work

Labour – You will have to work on that area, generally producing something.

Capital – You will have to invest money that, depending if you have luck on that bussines, you will recover that money or lose it.

Enterprise –


Opportunity Cost is the next best alternative given up by choosing another item with the same .

I want to buy a jacket that costs 300. I could spend that 300 in the jacket or save that money to buy later, a new ball.

I decide to save that money to buy a ball, so the shirt becomes the opportunity cost.


A business needs to buy two cars, but they can only afford one. The company decides to buy car A, so car B becomes the opportunity cost.

The goverment has to decide whether they build a hospital or a new school. They choose to build the school so the hospital becomes the opportunity cost.


In a business the better option is to divided the labour, this will make the workers be better in that one task, so the final product will have a better quality, and it will be faster. So one worker will perform just one task repeatedly.


Less time is wasted moving from one workbench to another, so they will produce more products also, because of the workers are trained to do one task the efficiency will be better, because the task will be completed in less time and in a better quality. All this increases the output.


-measure the ingredients.
-put them all together, and mix them.
-bake it.
-decorate the cake.


-they give jobs to people.
-business pays taxes, which help society.
-it satisfies peoples needs or wants.


It is the money that they add to the products, that the business will keep to have a benefit. So when people buy the product they will pay not only for the product itself but for the added value.


They can invest in advertising so it will be more popular, and people will pay more for the same product.
Also they can make change the quality to a worst one, the raw materials will be cheaper, and the selling price will remind the same.


Esta entrada fue publicada en Business. Guarda el enlace permanente.

1 respuesta a Revision Unit 1

  1. mariaaragone dijo:

    Well done, even though it was a bit late!

Deja una respuesta

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *