1

Business activity
Revision answers
1 a) Needs: shelter; clean water; clothing.
Wants: luxury house; Coca-Cola; car; designer jeans.
b) Needs are essential to life.
Wants are things we would like to have but are not essential to life.
2 Not enough resources to satisfy all our wants, so choices have to be made.
3 i) Land and natural resources: needed for supplying the space and raw
materials required for production.
ii) Capital: needed to finance production such as purchase of equipment, any
man-made resources needed for the production process.
iii) Labour: physical effort needed in the production process.
iv) Enterprise: risk taking and decision-making ability.
4 Students own example; it is the next best (most desired) alternative to the
product chosen.
5 For example, government builds a hospital rather than buying new army tanks;
business buys new trucks rather than new computers.
6 Splitting up a job into separate tasks that can then be performed by individual
workers.
7 By every worker focusing on what they do best and becoming an expert at it,
efficiency increases and so will output.
8 i) Getting supplies from store room
ii) Mixing ingredients
iii) Decorating cakes
iv) Packaging cakes
9 i) Jobs and incomes
ii) Products
iii) Taxes to government
10 The difference between selling price and cost of bought-in materials/
components.
11 Buy in cheaper supplies/designs but sell for same prices as currently charged;
offer better customer service and raise prices of existing supplies/designs.

Answers to activities
Activity 1.1
Students own answer.

Activity 1.2
a) Students own answer: For example, bread making: adding ingredients; mixing dough;
putting in oven and supervising baking; taking out of oven and putting in shop.
b) i) More efficient
ii) Faster production
iii) Workers skilled in one task
iv) Less time wasted moving from task to task

Activity 1.3
a) 70 cents
b) $1.20 (assuming no other bought in materials used)
c) No. Costs could increase more than revenue. It seems likely that profits might
increase in this case as the existing building is being used.
Cambridge IGCSE Business Studies 4th edition Hodder & Stoughton Ltd 2013

1 Business activity

Sample answers to exam-style

questions Paper 1
1 a) Any organisation that brings resources together to produce a good or service
to satisfy wants.
b) i) Sewing machine
ii) Aditis labour (sewing skills)
Other relevant answers possible.
c) i) Buying a sewing machine means that Gowri has less money to spend on
other items, for example, on a computer to keep a record of the accounts
of her business; the next most desired one would be the opportunity cost.
ii) Time that Gowri spends on setting up her business means that she cannot
earn money designing clothes for another business.
d) Advantage: Aditi will become even more skilled at sewing and Abha at
cutting. This will make Gowris business more efficient.
Disadvantage: Gowri will not learn these other skills as she may spend all her
time designing dresses. If Aditi is ill there will be no one to sew the dresses
and production will fall.
e) Sales of dresses will depend on how good the designs are and the quality of
the dresses. If other businesses exist then there will be a lot of competition
which will reduce chances of success. If Gowri knows what her customers
want in terms of designs, price and quality then this will increase chances of
selling all dresses the business makes.
Overall conclusion/judgement needed.
Sample answers to Question 2 on the Teachers CD-ROM.

Cambridge IGCSE Business Studies 4th edition Hodder & Stoughton Ltd 2013