Business Activity Factors and Choices
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Objective
I can define and provide examples of the four factors of production, explain the ways business can increase added value and understand that each business activity has opportunity cost.
Part 1 of 3
Key concepts
3 concepts
- 1
The four factors of production are land, labor, capital, and enterprise.
- 2
Added value is the difference between the selling price of a product or service and the cost of its brought-in materials and components.
- 3
Every business decision has an opportunity cost, meaning that when a business chooses to do one thing, it gives up the chance to do something else.
Part 2 of 3
Practice
3 questions
Imagine a farmer who grows organic vegetables. Identify and provide a specific example for the four factors of production that this farmer would utilize in their business.
A company manufactures basic wooden chairs. The raw wood and components cost $15 per chair, and they sell each chair for $40. Describe two methods, as discussed in the reading passage, that this company could use to increase the added value of its chairs.
Part 3 of 3
Exit ticket
Quick comprehension check
“Imagine a small business HJ that designs and sells handmade jewelry. a) Identify and explain two factors of production HJ would need, providing a specific example for each. b) Describe two different ways this jewelry business could increase the added value of its products. c) Explain an opportunity cost HJ might face if it decides to spend a large sum of money on advertising its new collection.”
Sample answer included in the free materials
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