The Nature of Business (AQA GCSE Business)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
Goods & Services
Goods are tangible products that are physically transferred from businesses to consumers
Diagram: Examples of Durable and Non-Durable Goods
Goods can be classified as durable or non-durable
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 & 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
|
|
|
---|---|---|
Healthcare |
|
|
Education |
|
|
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
|
|
---|---|
Product |
|
Customer sales |
|
Market research |
|
Promotional methods |
|
Examiner Tips and Tricks
Make sure that you can distinguish between goods and services, needs and wants, and the concept of opportunity cost. They are common topics for multiple choice questions.
Last updated:
You've read 0 of your 10 free revision notes
Unlock more, it's free!
Did this page help you?