Business and Enterprise
Business and Enterprise
This domain tests how a business idea becomes a viable venture: opportunity recognition, market research, feasibility, the business plan, factors of production and break-even reasoning. Questions often ask you to judge whether a proposed small business will survive.
Core rules
- Enterprise combines land, labour, capital and entrepreneurship to produce goods or services.
- Market research reduces risk by testing demand, price, competitors and customer needs before money is committed.
- A business plan sets out the idea, market, operations, finance and risks; it is used to guide decisions and raise finance.
- Fixed costs do not change with output in the short run; variable costs do.
- Break-even output = fixed costs ÷ (selling price − variable cost per unit).
Worked example
A student plans a printing service near school. Fixed monthly costs are P600 for a leased printer and licence. Variable cost is P0.30 per page; the price is P0.50 per page. Contribution per page is P0.20. Break-even is P600 ÷ P0.20 = 3,000 pages a month. At 4,000 pages, profit is 1,000 × P0.20 = P200 before any owner’s wage. The reasoning matters: the venture is only worthwhile if market research shows demand above 3,000 pages and the student values their time realistically.
Traps that cost marks
- Calling revenue profit.
- Omitting the owner’s wage or unpaid family labour from costs.
- Ignoring working capital tied up in paper, ink and credit sales.
- Presenting a business plan with no evidence of demand.
- Mixing personal money with business cash.