Forms of Business (Edexcel A-Level Business): Flashcards
📚Flashcards
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10 cards from this deck
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Practise the cards
10 cards from this deck
Opportunity cost
Opportunity cost
Benefit lost from next best alternative when a choice is made
Opportunity cost scope
Opportunity cost scope
Next best alternative only, not all foregone alternatives
Two types of opportunity cost
Two types of opportunity cost
Monetary (measurable) and non-monetary (intangible factors)
Trade-offs in business
Trade-offs in business
Selecting one option requires compromising another
Risk-reward relationship
Risk-reward relationship
Higher potential returns require accepting greater risks
Risk-averse businesses prefer
Risk-averse businesses prefer
Lower-risk, lower-reward options
Entrepreneurship benefit: independence
Entrepreneurship benefit: independence
Complete control over all business decisions
Entrepreneurship trade-off: financial security
Entrepreneurship trade-off: financial security
Giving up regular salary, insurance, pension, holiday pay
Liquidity vs profitability trade-off
Liquidity vs profitability trade-off
Holding cash provides security but reduces investment in assets
Profit margins vs turnover trade-off
Profit margins vs turnover trade-off
Lower prices increase sales but compromise profit margins