Role of an Entrepreneur in an Economy
Role of an Entrepreneur in an Economy
Courses Info
Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes
The process of Creative Destruction
- Creative destruction leads to the development of new goods / services through innovation and advanced technology
- Firms may be incentivised to enter the market if they see firms possessing monopoly power and making supernormal profits
- Creative destruction encourages competition in the market
- Technological change is influenced by creative destruction
Making decisions to operate, expand, and develop a business
- Entrepreneurs take risks while creating ideas and putting them into action
- Entrepreneurs take into consideration past mistakes, potential profitability and potential gaps in the market when making decisions
- Entrepreneurs also have to consider the opportunity cost of the capital they may have to give up, the implications and whether the investment will produce a greater return
- Offering a larger product range, taking over / merging with another firm, or employing more workers are ways in which entrepreneurs can expand their business
Adding Value
- Entrepreneurs take risks and are rewarded with the profit gained from doing so
- Entrepreneurs want to gain profit and avoid making a loss, encouraging them to innovate
Quick Fire Questions – Knowledge Check
1. Explain the process of ‘Creative Destruction’ (4 marks)
2. Explain how entrepreneurs make decisions to operate, expand, and develop a business (4 marks)
3. Explain how entrepreneurs add value to a business (2 marks)
Next Revision Topics
A Level Economics Past Papers
