Factors of Production Flashcards
Name the 4 factors of production:
- Capital
- Labour
- Natural resources
- Entrepreneurship
Definition of capital:
Capital is money or capital goods such as land, buildings and equipment that is contributed by a business owner to start a business. It can be either own capital or borrowed capital.
Remuneration of capital:
The remuneration of capital is interest.
Own capital - Belongs to the business owner.
Borrowed capital - belongs to the bank and the money that was borrowed must be repaid with interest.
Definition of labour:
Refers to the work people do to produce goods and services.
Different kinds of labour:
- Skilled labour - workers trained to do specific job and have specialised knowledge and skills.
- Semi-skilled labour - workers did receive some training, but do not enable the worker to do specialised labour.
- Unskilled labour - workers doesn’t have any training, usually performing physical labour.
Remuneration of labour:
Employees must be remunerated for the time, effort and skill they contribute to the business enterprise.
Types of remuneration of labour:
Salary: Monthly payment to employees and is fixed
Wage: Weekly / daily payment to employees and payed to unskilled workers.
Piece meal: Employees are paid for a specific job.
Time related: Employees are paid according to an hourly or daily rate.
Fair employment practices:
- Basic Conditions of Employment Act
- Employment Equity Act
- Black Empowerment
Definition of natural resources:
Refers to all resources from nature, like water and gold
Remuneration of natural resources
Rent
Definition of entrepreneurship:
Someone who converts a business idea into a real business. They are usually self-employed and create own income.
Remuneration of entrepreneurship:
Profit
