Important Business Terms to Know

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Key Terms

Business Activity

•Barter System – a system of exchange which involves the swapping of goods between individuals. •Capital Goods – goods used to produce other goods, such as tools, equipment and machinery. •Consumers – individuals who use or ‘consume' goods and services to satisfy their needs and wants. •Customers – individuals who buy goods and services supplied by businesses. •De-industrialization – the decline in manufacturing.

•Division of labour – specialization in specific tasks or skills by individuals. •Factors of production – resources used by businesses to produce goods and services. •Markets – anywhere that buyers and sellers communicate to exchange goods and services. •Money – any substance which is generally accepted as a means of exchange. •Needs – human requirements which must be satisfied for survival. •Primary production – activities which involve the extraction of raw materials from the earth and the growing of food. •Secondary production – activities such as manufacturing which transform raw materials into finished goods. •Specialisation – in business, the production of a limited range of goods. •System – parts that work together to achieve an objective; a system can be a communication system, a business, an economic or political system. •Tertiary production – activities which involve the provision of services. •Wants – human desires which are unlimited.

Starting a Business

•Business plan – a statement made by a business, outlining the way it will attempt to achieve its objectives. •Copyright – the ownership of material such as books and films which is protected by law from re-use without permission. •Hire purchase/credit sale – methods used to buy goods now and ay off the balance over a period of time. In the case of the former, the goods only belong to the buyer when the final payment is made. •National Insurance contributions – payments made by employees and employers to the...
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