1.2.1 Role of an entrepreneur in the economy

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    Entrepreneur – Someone who has a business idea and develops it. They take the risks m                         and the profits that come with success and the losses that come with m                                   failure

     

    • Entrepreneurs organise the factors of production in order to set up and create an enterprise
    • They also make decisions to operate, expand and develop a business.
    • To add value by selling the output by more than the cost of the input.
    • Be innovative.

     

    Innovation – Developing a product which is an improvement on an existing one or                                 is changed/altered to fit a new market.

     

    • They also use creative destruction which involves organising factors of production to create and set up an enterprise.
    • Creativity leads to new ideas, inventions, and products which means that consumers switch to these newer products whilst the old ones become outdated.
    • Creative destruction is linked to technological change which allows new developments to be made in products.
    • This can disrupt business that have failed to adapt to changing tastes or new technologies.
    • Joseph Schumpeter was an economist who stated

    “only those with creative destruction can call themselves

    entrepreneurs”

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