The Nature Of Business aqa

课 Progress

0% Complete

Exam code:8132

Goods and services

Goods are tangible products that are physically transferred from businesses to consumers

Examples of durable and non-durable goods

Diagram categorising goods as durable with a fridge, table set, and phone, and non-durable with coffee cup, chocolate bar, and washing powder. — **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 and 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

Product Type	Needs	Wants
Healthcare	Emergency care Maternity services Dentistry	Cosmetic surgery Laser eye procedures Dental hygiene services
Education	Primary level schooling Secondary level schooling	One-to-one tuition Tertiary education E.g. university

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

Focus	Explanation of the Trade-off
Product	Choosing to spend money upgrading an existing product may result in the loss of the next best alternative – research and development on a new product
Customer sales	A firm selling organic avocados are offered a supply contract by a supermarket that wants to buy all of their stock each month, but at a low price The supermarket is a prestigious customer The firm decides not to accept the contract as the opportunity cost (loss of prestigious customer) is worth less than the lost revenue to existing customers
Market research	Foregoing market research may help the business get its product to market quicker, however, the trade off is that the product may not have the features/qualities desired by the market
Promotional methods	Businesses have a limited amount of money to spend on promoting their products. Choosing to sponsor an elite athlete means that the business may have to give up other forms of promotion, such as radio advertising

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.

Business GCSE AQA