Chapter 1 Flashcards
(36 cards)
What are the four Factors of Production?
Labour, Entrepreneurship, Captial and Natural resources
Def: Natural Resources
All means made available by nture to be used as inputs in the production process
Def: Economic goods
the resources that are scarce and that people are willing to pay for
Def. Free goods
Those natural resources that are freely available in nature
The characteristics of natural resources
Natural resources are scarce
Natural resources have a price
Uneven distribution of natural resources
Adding value to natural resources
The importance of natural resources
To serve as a source of food
To serve as inputs for the production of goods and services
To provide opportunities for international trade
The economic significance of natural resources
Agriculture, forestry and fisheries
Minings
Remuneration of natural resources
Rent
Def. Labour
includes all the work done by people, whether they are skilled or unskilled and whether they provide physical or mental (thinking) work
Def.In-service training
Training that takes place while a person is already employed and doing a job
The classification of labour
higher level (skilled), intermediate level (semi-skilled) lower level (unskilled).
The characteristics of labour
Income as a goal
Its part of its owner
Not storable
Supply cannot suddenly increase
The economic significance of labour
They need the right number of skilled and semi-skilled workers.
The shortage of skilled labour is a very serious matter which we suffer from
Many South African businesses are labour intensive, so labour costs make up a big part production costs. The productivity of the labour force determines the speed with which goods are produced, the quality and the cost of the output.
Remuneration for labour
Nominal wages
Real wages
Def. nominal wage
the amount that the worker receives each day, week or at the end of the month
real wage
the amount of goods and services that a person can buy with the nominal wage
Def. Capital
the 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
Def. Money capital
money to buy capital goods is called money capital
Def. Real capital
the actual tools and machinery bought with money capital to use in the production process to manufacture useful goods and service
Def. Fixed capital
the land and buildings, vehicles, equipment and furniture
Def. Durable goods
can be used more than once in the production process
Def. Floating capital
raw material used only in the production process
Def. Non-Durable goods
can only be used once in the production proces
What are the characteristics of capital
Capital goods are made by people
Machines wear out
Money capital can be changed to any type of capital
oney capital can be changed to any type of capital
Capital is expensive
