Section 1
Business Activity
Covers the purpose of business activity, how businesses are classified, types of organisation, enterprise, and the objectives of businesses and their stakeholders. A foundational section that underpins the entire syllabus.
Select a topic from the sidebar. Each topic includes key definitions, core concepts, and examiner tips. Work through them in order or jump to the topic you need. Pair with the topical past papers for best results.
Section 1 Topics
5 topics1. Needs, Wants & Scarcity
🍞 Needs
Goods or services essential for survival — food, water, shelter, clothing.
📱 Wants
Goods or services people desire but don’t need to survive — a smartphone, a holiday. Wants are unlimited.
⚖️ Scarcity
Resources are limited but human wants are unlimited — this is the basic economic problem.
🔀 Opportunity Cost
The next best alternative given up when a choice is made. Every decision has a trade-off.
Resources are limited but human wants are unlimited — this is the basic economic problem that forces individuals, businesses and governments to make choices.
The next best alternative forgone when making a choice. Example: if a government spends money on hospitals, the opportunity cost might be new roads that were not built.
💼 Why Scarcity Matters for Businesses
- Resources (land, labour, capital) are limited → businesses must choose what to produce.
- Consumers can’t have everything → they choose what to buy.
- Every decision involves a trade-off — choosing one thing means giving up another.
- Scarcity is WHY businesses exist — they provide solutions to people’s needs and wants!
🃏 Click the cards — Need or Want?
Exam Tip: Always link opportunity cost to a specific decision in the question. Needs are few (survival essentials); wants are unlimited and vary by person. Scarcity is WHY businesses exist.
2. Specialisation & Division of Labour
Focusing on producing a particular good, service, or task. It occurs at the level of individuals, businesses, regions, and countries.
When a car factory splits work into separate tasks — one worker fits engines, another fits doors — that’s Division of Labour in action. Everyone becomes an expert at their task, making the whole process faster and cheaper.
✅ Advantages
- Increased productivity
- Lower unit costs
- Workers become expert at their task
- Faster production
❌ Disadvantages
- Workers may become bored (repetitive tasks)
- Risk of unemployment if skills become obsolete
- Over-dependence on one task/product
3. Purpose of Business Activity
The fundamental purpose of business is to combine resources (inputs) to produce goods and services (outputs) that satisfy needs and wants.
INPUTS
🌍 Land
👷 Labour
🏭 Capital
💡 Enterprise
PROCESS
⚙️ Production &
Transformation
OUTPUTS
📦 Goods (physical)
🛎️ Services (intangible)
🏢 Why Do Businesses Exist?
- To satisfy consumer needs and wants through goods and services
- To make a profit for the owners
- To provide employment
- To create wealth and contribute to the economy
- To provide goods/services that may not otherwise be available
4. Adding Value
The difference between the selling price of a product and the cost of bought-in inputs.
Added Value = Selling Price − Cost of Inputs
🧮 Try It: Added Value Calculator
Baker example: flour+eggs+butter = $2, cake sells for $8 → Added Value = $6 ✓
How Businesses Increase Added Value
| Method | Real-World Example |
|---|---|
| 🏷️ Branding | Apple charges premium prices — customers believe the brand is worth more. |
| ⭐ Improving Quality | Better materials or craftsmanship allow a higher selling price. |
| 🎨 Unique Design | A stylish design justifies charging more than competitors. |
| 😊 Customer Service | Customers pay more for a better shopping experience. |
| 💰 Reducing Inputs | Negotiating lower supplier prices increases value added without changing selling price. |
| 🕐 Convenience | A 24-hour store can charge more than a supermarket for the same product. |
Exam Tip: Added value is NOT the same as profit — wages and overheads are still deducted after. Adding value means raising the selling price OR cutting input costs. Always give a business example in your answer.
⚡ Quick Revision Summary
Needs vs Wants
Needs = essential for survival. Wants = desirable but not essential.
Scarcity
Resources are limited; wants are unlimited → the economic problem.
Opportunity Cost
The next best alternative given up when a choice is made.
Specialisation
Focusing on one task/product → increases efficiency & productivity.
Purpose of Business
Combine inputs → produce outputs → satisfy needs & wants → make profit.
Added Value
Selling Price − Cost of Inputs. Increased by branding, quality, or cutting costs.
Full Notes Coming Soon
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Full Notes Coming Soon
Detailed notes for this topic are being written.
Full Notes Coming Soon
Detailed notes for this topic are being written.
Full Notes Coming Soon
Detailed notes for this topic are being written.
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