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Economics G11 > Factors of Production > Flashcards

Factors of Production Flashcards

1
Q

What are natural resources

A

Material sources of wealth that occur in a natural state and have economic value

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2
Q

What are the 4 characteristics of natural resources

A

Scarce
Have a price
Uneven distribution
Can have value added

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3
Q

What does it mean when we say natural resources are scarce

A

They are scarce in relation to people’s demands and the quality needed in the production process. There are not enough natural resources to satisfy everyone’s wants and needs

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4
Q

What do we mean when we say natural resources have a price

A

For people to use natural resources they have to pay for them
The remuneration is rent
The rent is determined by the quality and quantity of the resources

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5
Q

What do we mean when we say natural resources are unevenly distributed

A

Natural resources are not spread equally across all countries
The surplus of resources in one country and a shortage in another leads to international trade
Countries earn an income for exports and have to pay for imports

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6
Q

What does it mean when we say natural resources can have value added to them

A

Most natural resources are not useful in their natural form
They need to be changed or transformed to make them useful for human consumption

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7
Q

What is the importance of natural resources (2)

A

To serve as inputs for the production of goods and services
To provide opportunities for international trade

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8
Q

What do we mean when we say natural resources serve as inputs for the production of goods and services

A

No production is possible with the resources that come from nature

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9
Q

What do we mean when we say natural resources provide opportunities for international trade

A

When a country has a surplus of a particular natural resource, they can export it
Countries who lack a particular resource can import it

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10
Q

What are the two sectors of natural resources that are economically significant

A

Agriculture, forestry and fisheries
Mining

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11
Q

How are agriculture, forestry and fisheries economically significant

A

Important part of SA’s economy
Provide in all of SA’s needs
Offers employment opportunities to between 6 and 10 million people

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12
Q

How is Mining economically significant

A

SA has a large variety of mineral resources of high quality and substantial quantities
Through mining, thousands are employed and SA earns millions

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13
Q

What is the definition of labour

A

Labour includes all the work done by people, whether skilled or unskilled and whether physical or mental.

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14
Q

What are the 3 classifications of labour

A

Skilled
Semi-skilled
Unskilled

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15
Q

What is skilled labour

A

All people that have passed Grade 12 and have at least 2 years of training at a tertiary institution. Economists call them the professional class
Shortage in South Africa

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16
Q

What is semi-skilled labour

A

All people who have passed at least Grade 9 and have undergone a few months of in-service training

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17
Q

What is unskilled labour (4)

A

People who have only finished primary school or have not been to school at all
Contribution to production process is mainly physical
Receive a wage at the end of the day or week - No guarantee of work continuing for longer than the day or week
South Africa has a surplus

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18
Q

What are the 4 characteristics of labour

A

Income as a goal
Is part of its owner
Not storable
Supply cannot suddenly increase

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19
Q

What do we mean when we say income is a goal of labour

A

When people work they goal is usually to earn money and secure an income
Need money to buy goods and services to satisfy their needs and wants

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20
Q

What do we mean when we say labour is part of its owner

A

Labour cannot be separated from its owner
The labour and the person doing the labour is one and the same

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21
Q

What do we mean when we say labour is not storable

A

Labour cannot be stored or kept
If a worker is unemployed for 3 years, they have lost 3 years of providing labour

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22
Q

What do we mean when we say supply of labour cannot suddenly increase

A

Labour force is made up of people between the ages of 15 and 64
It often takes a long time for people to enter the labour market due to training times etc

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23
Q

What is the economic significance of labour (5)

A

Production cannot take place without labour
An economy needs to increase its production in order to grow
It needs a suitable labour force in order to grow
The labour force needs to have the right number of skilled and semi-skilled labour available
Shortage of technically skilled labour is a big problem in South Africa

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24
Q

What is the remuneration of labour

A

Salaries (Per month)
Wages (Per week)

25
What are nominal wages
The amounts that the worker receives each week
26
What are real wages
The amount of goods and services a person can buy with a nominal wage - Buying power of wages
27
What is the definition of capital
Can be defined as money invested in machines and equipment that will be used in the production process to change the form of materials into useful goods and services
28
What are the two types of capital
Money Real
29
What is money capital
Entrepreneur needs money to buy machinery or tools needed in the production process The money to buy these capital goods is called money capital
30
What is real capital
The actual tools and machinery bought with money capital Can be divided into fixed capital and working capital
31
What is Fixed Real capital
Land, buildings, vehicles etc. Durable goods that are used more than once in the production process
32
What is Working Real Capital
Capital that is only used once in the production process such as raw materials. Non-durable capital goods
33
What are the 5 characteristics of capital
Capital goods are made by people Machines wear out Money capital can be changed into any type of capital Difficult or impossible to change real capital Capital is expensive
34
What do we mean when we say capital goods are made by people
It's a factor of production that is manufactured or made by people
35
What do we mean when we say that machines wear out
Machines get worn out or break down over time They lose value over time (Depreciation)
36
What do we mean when we say money capital can be changed to any type of capital
It can be changed into any type of asset the business wants to buy Easy to move money from place to place
37
What do we mean when we say it is difficult or impossible to change real capital
It loses its mobility It is difficult to move Sometimes geographically immobile such as a bulding
38
What do we mean when we say capital is expensive
Buying machines and other capital goods is very expensive
39
What are the 5 functions of capital
Provides tools to add form utility Makes mass production possible Improves the quality of products Makes standardisation possible Makes selling on credit possible
40
What is the economic significance of capital (8)
Economic growth is a direct result of an increase in the capital assets of a country Savings create capital and a higher investment in capital goods Savings are thus the starting point for economic growth To increase the economic growth rate of SA, consumer spending will have to decrease Resulting savings can be channeled to fixed investments Will result in more job opportunities and less unemployment Increase in income will again increase savings, economic growth cycle will continue
41
What is capital widening
Extra capital is used with an increase quantity of labour Ratio of capital and output per worker does not change
42
What is capital deepening
Increase in the quantity of capital good available per worker Ratio changes
43
What is the remuneration of capital
Interest
44
What is entrepreneurship
Process of bringing together the factors of production and using them to produce or sell products or services. People who start, manage and control businesses - Take risks and make decisions
45
What are the 4 characteristics of entrepreneurship
Combines the other factors of production Demonstrates initiative Takes risks Makes decisions
46
What do we mean when we say entrepreneurship combines the other factors of production
To satisfy the needs and wants of consumers - Entrepreneurs need to source enough factors of production at the right time, place and quantities to make the biggest profits
47
What do we mean when we say an entrepreneur demonstrates initiative
An entrepreneur is responsible for all losses if the business idea fails or if the business goes bankrupt
48
What do we mean when we say an entrepreneur takes risks
An entrepreneur is responsible for all losses if the business idea fails or if the business goes bankrupt
49
What do we mean when we say an entrepreneur makes decisions
An entrepreneur makes decisions on what to produce, where to set up the business and who to produce for Decide on quality and quantity, buy land or lease a premises, buy stock or raw materials and which form of ownership to choose
50
What is the economic significance of entrepreneurship (6)
Plays an important role in contributing to growth and progress in any country Formal sector cannot provide employment to all, therefore informal sector plays and important role in providing income and employment Introduces new goods and services Increases competition Reduces inflation Tax revenue of government increases
51
What is the remuneration for entrepreneurship
Profit
52
What are the two types of profit
Gross Profit Net Profit
53
What is gross profit
The difference between sales and cost of sales
54
What is net profit
Gross profit plus all other income minus all expenses the business had to pay to keep it running
55
What are factors that influence profits
Skills of the entrepreneur Demand of the product Production processes and techniques
56
What is community participation in local planning and activities
Community forums, together with local government, can play an important role in development of entrepreneurs Can reduce unemployment, alleviate poverty and turn around a low regional growth rate Example - Small and Medium Business Development Corporation (SMBDC) Example - Local Economic Development (LED)
57
What are Economically Marginalised Groups
Groups that are worse off relative to the rest of the population in terms of income and non-income, which includes basic services Earn less income than the minimum income required to satisfy basic needs Largely unemployed, lack basic skills and cannot be trained because they cannot read or write
58
What is marginalisation an outcome of
Apartheid excluding people of colour Women being excluded from the business world
59
What laws have been put in place to assist marginalised groups
Black Economic Empowerment and the Employment Equity Act Affirmative Action Skills development with SETAs (Sector Education and Training Authorities)

Economics G11 (12 decks)

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