Factors of production Flashcards
economic problem
satisfying people’s unlimited wants and need with limited resources
4 factors of production
natural resources
labour
capital
entrepreneurship
natural resources
those resources extracted from nature that humans need to produce goods and services
labour
all human effort provided by people to earn remuneration
capital
man-made resources used to produce more goods and services
entrepreneurship
the person who takes initiative to start the business, organize its production and take risks
why are natural resources scarce
there are not enough natural resources in the world of required quality to make all things that people might want
remuneration for natural resources
rent
what leads to international trade
surplus of resources in one country and the scarcity of resources in another
what are the characteristics of natural resources (4)
scarce
have a price
unevenly distributed
mostly not very useful in their natural form
importance of natural resources (2)
serve as inputs for production
provide opportunity for int trade
what four industries of natural resources provide economic significance
agriculture
forestry
fisheries
mining
3 types of labour
skilled
semi-skilled
unskilled
4 characteristics of labour
has income as a goal
is part of its owner
not storable
supply cannot suddenly increas
why can labour not be separated from its owner
the labour and the person doing the labour are one and the same
why is labour economically significant
production cannot take place without physical and mental effort and an economy needs to increase its production in order to grow
remuneration for labour
salaries and wages
difference between nominal and real wages
nominal - amounts that the worker receives each week
real - amount of goods and services that a person can buy (buying power of wages)
2 types of capital
money and real
difference between money and real capital
money - money needed to buy capital
real - actual machinery/tools bought
5 characteristics of capital
(think of types of capital)
-capital goods made by people
-machines wear out
-money capital can be changed to any type of capital
-difficult to change real capital
-expensive
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
what is the economic significance of capital
economic growth is a direct result of an increase in the capital assets of a country
describe how savings is the starting point of economic growth (4 steps)
1 saving creates capital
2 resulting savings can be channelled to fixed investments
3 financial institutions will have more money available to lend out to businesses
4. results in more jobs opportunities
remuneration for capital
interest
characteristics of entrepreneurship (4)
- combines all factors of production
- demonstrates initiative
- takes risks
- makes decisions
the economic significance of entrepreneurship (6)
- contributes to growth and progress in any economy
-provides income and employment - introduces new goods and services
-increases competition
-reduces inflation
-increases tax revue for gov
remuneration for entrepreneurship
profit
2 types of profit
gross and net
gross profit
difference between sales and cost of sales
net profit
gross profit plus all other income minus all expenses
factors that influence profit (3)
- skills of the entrepreneur
- demand of the product
- production processes and techniques
how can community participation in local planning and activities play an essential role in the development of entrepreneurs
community forums, together with local government, can play an important role in the development of entrepreneurs through skills development, financial assistance and making the best use of natural resources
how can community participation in local planning and activities help an economy
can help reduce unemployment, alleviate poverty and turn around a low regional growth rate
example of community participation which aid entrepreneurs
Small and Medium Business Development Corporation (SMBDC)
example of community participation which helps unemployment
Local Economic Development (LED)
what are economically marginalised groups
groups are seen as worse off relative to the rest of the population in terms of income, and non-income
They earn less income than the minimum income required to satisfy basic needs
They are largely unemployed, lack basic skills and cannot be trained because they are unable to read or write
what is the most common result of marginalisation
material deprivation
how have marginalised groups become more empowered (3)
- since 1994 laws have been put in place to protect the rights of all employees (eg. the law of Black Economic Empowerment and the Employment Equity act)
- affirmative action plays an important role in empowerment
- skills development with the help of SETAS (Sector education and training authorities) in primary, secondary and tertiary sector
