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The Purpose of Business

Why does every shop, farm and factory exist? Meet the purpose of business, the difference between goods and services, the factors a business needs to produce, and the choices it must make.

⏱️ 16 min 🎯 14 activities Teachers Not yet rated Students Not yet rated

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What you'll cover

Why businesses exist 🏪

Every shop, factory, farm and app started because someone spotted something people **need or want**. That is **business activity**: providing goods and services that meet those needs. This module is about why businesses exist, what they use to produce, and the choices they must make along the way.

Words to know 📖

Four ideas run through this module:

Goods or services ⚖️

Businesses provide two broad things.

Match each factor 🔗

  • Land
  • Labour
  • Capital
  • Enterprise
  • The natural resources a business uses, such as land and raw materials
  • The workers and their effort and skills
  • The tools, machines and money used to produce
  • The person who brings the others together and takes the risk

Every choice has a cost 💡

Businesses have limited money, time and resources, so every choice means giving something up. The **opportunity cost** is the next best thing you give up when you choose one option. Spend on new machines and you cannot also spend that money on advertising, so the advertising is the opportunity cost.

Good or service? 🎯

A hairdresser cuts hair for a customer. Is that mainly a good or a service?

  • A service, because it is an action done for the customer
  • A good, because hair is a physical thing
  • Neither a good nor a service
  • It is a factor of production

Why start a business? ✅

Select the TWO reasons a person might start a business.

  • To fill a gap in the market with a good or service
  • To provide something that benefits other people
  • To deliberately lose as much money as possible
  • To make sure nothing ever changes

Match each sector 🏭

  • Primary
  • Secondary
  • Tertiary
  • Extracts raw materials, such as farming, fishing or mining
  • Makes or builds products, such as a factory or a bakery
  • Provides services, such as a shop, a bank or a hospital

From tree to shop 🪜

An interactive activity.

What was given up? 🔎

A cafe owner can buy either a new coffee machine or new tables, but not both. She buys the coffee machine. What is the opportunity cost?

  • The new tables she did not buy
  • The coffee machine she bought
  • The money she has left over
  • Both the machine and the tables

Purpose in words 🧩

A _____ is a physical product, while a _____ is an action done for a customer. The four factors of production are land, labour, capital and _____. The next best choice given up when you decide is the _____ cost. A farm that grows crops is in the _____ sector.

good service enterprise opportunity primary want labour secondary tertiary capital

Spot the true statements 🖍️

An interactive activity.

Which sector? 🧭

An interactive activity.

Starting a business ✍️

An interactive activity.