Exam code: 0450, 0986 & 0264, 0774
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Define added value.
Added value is the difference between the price charged to the customer and the cost of inputs required to create a product or service.
What is an example of how businesses can increase added value?
Businesses can increase added value by creating a strong brand, offering more convenience (e.g. tablets instead of liquid), improving quality, having unique selling points, or enhancing design.
True or False?
The higher the added value, the greater the likely profits of a business.
True.
Increasing added value enables a business to make higher profits.
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Define added value.
Added value is the difference between the price charged to the customer and the cost of inputs required to create a product or service.
What is an example of how businesses can increase added value?
Businesses can increase added value by creating a strong brand, offering more convenience (e.g. tablets instead of liquid), improving quality, having unique selling points, or enhancing design.
True or False?
The higher the added value, the greater the likely profits of a business.
True.
Increasing added value enables a business to make higher profits.
Define opportunity cost.
Opportunity cost is the loss of the next best alternative when making a decision.
What is an example of opportunity cost for a consumer?
If a consumer chooses to buy a new phone, the opportunity cost is the new jeans they cannot buy.
True or False?
Opportunity cost only applies to consumers, not producers or governments.
False.
Opportunity cost applies to consumers, producers, workers, and governments, as all must make decisions about resource use.
What are the factors of production?
Factors of production are resources used to produce goods and services: land, labour, capital, and enterprise.
Which factor of production involves taking risks and organising resources?
The factor of production that involves taking risks and organising resources is enterprise.
True or False?
Capital refers to natural resources such as oil and land.
False.
Capital is any man-made resource used to produce goods and services, while natural resources are land.
How can a business's choice to increase added value involve opportunity cost?
If a business invests resources in increasing added value, the opportunity cost is what else those resources could have been used for, such as reducing prices or expanding production.