The Nature of Business (AQA GCSE Business): Revision Note

Goods and services

• Goods are tangible products that are physically transferred from businesses to consumers

Examples of durable and non-durable goods

• Durable goods are those that can be used time and again

  • Examples include refrigerators, furniture and mobile phones

• Non-durable goods are consumed soon after they are purchased

  • Examples include chocolate bars, washing detergent and takeaway coffee

• Services are intangible products that are provided and consumed at a particular time or place to consumers or businesses

  • Consumer services include train journeys, on-demand video streaming and hairdressing

  • Commercial services include business accounting, office cleaning and courier services

Needs and wants

• Businesses thrive when they are able to meet customer needs and wants

  • Needs are considered to be essential

    • E.g. shelter, warmth or food

    • Essential needs cover a range of goods and services that individuals expect to be able to afford themselves or access through the public sector

      • Examples include health and education services, water, energy and internet access, childcare and elderly care services

  • Wants are desires which are non-essential, even if consumers consider them to be essential

    • E.g. branded trainers, an overseas holiday, a wide-screen television

    • Whilst consumers do not need these products to survive, they improve their quality of life

Education and healthcare: examples of needs and wants

Opportunity cost

• Opportunity cost is the loss of the next best alternative when making a decision

• Customers have to make choices about how to best allocate their limited financial resources amongst their competing needs and wants

• In making these choices, they face an opportunity cost

  • If a consumer chooses to purchase a new phone, they may be unable to purchase new jeans

    • The jeans represent the loss of the next best alternative (the opportunity cost)

• Businesses also frequently face the same problem

  • If a business decides to focus on producing electric vehicles, it may be unable to produce petrol vehicles

    • The petrol vehicles represent the loss of the next best alternative (the opportunity cost)

• A trade-off occurs when two things cannot be fully achieved

  • Having more of one thing may mean having less of another

Examples of potential trade-offs