Economic and Management Sciences: Production, Entrepreneurship, and Financial Literacy

Comprehensive practice flashcards covering the production process, economic growth, productivity, personal savings, banking, entrepreneurship traits, SWOT analysis, advertising principles, and business operations.

How is production defined, and which four factors of production must be combined for it to take place?

Production is the process of changing raw materials (inputs) into goods and services (outputs) that can be used by consumers and sometimes by other businesses. It takes place when natural resources, labour, capital, and entrepreneurship are combined.

What are the five categories of business inputs listed in the study material?

1. Materials: raw materials or natural resources (e.g., plants, animals, water). 2. Manufactured items: equipment, vehicles, and machines. 3. Labour: mental and physical labour (human resources). 4. Money: capital. 5. Information: knowledge and instructions needed to make decisions and carry out production effectively.

What is sustainability, and why is harvesting indigenous forests such as the Amazon considered unsustainable?

Sustainability is the ability to meet the basic needs of people today without ruining the chances of future generations meeting their needs tomorrow. Cutting down indigenous forests is unsustainable because hardwood trees take hundreds of years to grow.

According to this bread production diagram, what transformation processes occur between the grain washing stage and the final packing stage?

Flour grinding, dough kneading, and baking.

Based on this canned pineapple production diagram, what are the three main transformation stages the pineapple fruit undergoes prior to the canning process?

Peeling & coring, trimming, and slicing.

What is economic growth, and how is it measured?

Economic growth is an increase in the production and sales of goods and services and an increase in the economic wealth of a nation. It is measured by the percentage change in gross domestic product (GDP), which is the total value of goods produced and services provided in a country during a period of one year.

What are the economic costs or disadvantages associated with a fast-growing economy?

An increase in inflation (general price increases) and negative impact or damage to the environment from higher production and consumption, leading to pollution, road congestion, solid waste, and forest destruction.

What is productivity, and against which three benchmarks can it be measured?

Productivity is the relation between output and the amount of input used to produce that output, as well as the rate at which goods and services are produced. It can be measured according to time, labour, or cost benchmarks.

What are the advantages of using robots in production factories?

People can be replaced in jobs that are boring or do not require much skill, robots can be used where working conditions are difficult or dangerous, and although expensive to install, they are very economical to run.

How do saving, investing, and interest differ in meaning?

Saving means putting money aside for future use. Investing means putting money into an asset or financial product to earn a return or grow money. Interest is the money earned on money that has been saved or invested.

How does a money market account differ from an ordinary savings account?

A money market account is designed for saving or investing money not needed immediately and is suited for larger amounts of money than an ordinary savings account. It may offer a higher interest rate and has different withdrawal or minimum-balance rules.

What is a bond, and how does it differ from holding shares?

A bond is an investment where you lend money to a government or company for a specified period to earn interest, with the original amount repaid at maturity (you are lending, not an owner). In contrast, shares represent units of ownership in a company where you become a part-owner and may receive dividends.

What is the difference between a pension fund and a retirement annuity (RA)?

A pension fund is arranged by employers, with contributions made by both the employer and employee while working, usually paying out monthly when older than $60$ years. A retirement annuity (RA) is a personal long-term investment that can be used by self-employed individuals or to supplement other retirement savings.

What documentation is required in South Africa to open a youth savings account for applicants over $16$ versus under $16$ years old?

Applicants must be under $18$ and reside in South Africa. Over $16$: a South African ID book/card or birth certificate, plus proof of residence with a parent/guardian's details and residential address. Under $16$: a parent/guardian must accompany the child with their own ID book/card, proof of address, and the child's birth certificate.

How do debit cards and credit cards differ in how they fund purchases?

A debit card provides electronic access to the cardholder's own bank account to use their existing funds instead of cash. A credit card allows the cardholder to borrow money from the bank for payments or draw cash from a short-term bank loan.

What is a stokvel, and what are its four common models?

A stokvel is an invitation-only group of $12$ or more people who pool money for a specific purpose. Its four models are: 1. Contribution stokvel (rotational payout of lump sums). 2. Basic stokvel (pays out for specific events like funerals or Christmas). 3. Purchasing stokvel (buys income-generating assets like marquees). 4. Family stokvel (reserves money for major family/business expenses).

What advantages does setting up a family trust provide?

Trusts have continuity of existence (they continue even if owners die or retire, paying benefits to dependents with minimal costs), trust assets are protected if a family member becomes bankrupt, and income split among members is tax-exempt below an amount determined by the Minister of Finance.

How do financial organisations differ from financial institutions in the provided notes?

Financial organisations are smaller, newer enterprises that collect money to invest elsewhere or provide small loans (e.g., Loanseekers). Financial institutions are long-established organizations offering banking, medical aid, life insurance, and pension investments (e.g., FNB, ABSA, Capitec, Old Mutual, Discovery).

What is an entrepreneur?

An entrepreneur is a person who recognises a need in a community and starts a business to meet that need.

How are the personality traits 'Disciplined' and 'Persevering' defined for an entrepreneur?

Disciplined means committing to hard work, doing tasks that may not be enjoyable, avoiding distractions, and not putting off urgent tasks. Persevering means never giving up, learning from mistakes, and finding solutions rather than dwelling on problems.

An entrepreneur buys knitted puppy jerseys for $\text{R}15$ each. Expenses for transport, advertising, and packaging amount to $\text{R}8$ per jersey, and the target profit is $\text{R}5$ per jersey. What is the mark-up and the final selling price?

The mark-up is $\text{R}13$ ($\text{R}8$ expenses + $\text{R}5$ profit), and the selling price is $\text{R}28$ ($\text{R}15 + \text{R}8 + \text{R}5 = \text{R}28$).

What four methods are commonly used to collect information during market research?

Surveys, interviews, focus groups, and customer observation.

In a SWOT analysis, which factors are internal and controllable, and which are external and uncontrollable?

Strengths and Weaknesses are internal attributes of the business that can be controlled. Opportunities and Threats are external factors in the business environment that cannot be controlled.

What are the four steps recommended to achieve business goals?

1. Take action – get going already! 2. Keep comparing your progress with your goal – are you still on track? 3. Reward yourself if you are successful. 4. Learn from your mistakes.

What does each letter represent in the AIDA principle for advertising?

A = Attention (attract attention and inform customers the product/service exists). I = Interest (get interest in what the product/service can do). D = Desire (create the need to have or try it). A = Action (lead customers to request information or make a purchase).

What is the difference between variable costs and fixed costs in a business?

Variable costs change depending on the volume of products produced (e.g., raw materials, packaging, casual wages, electricity). Fixed costs remain constant every month regardless of production volume (e.g., permanent staff salaries, rent, maintenance contracts, insurance payments).

How do formal businesses differ from informal businesses?

Formal businesses operate with regular wages, normal hours, well-kept records, pay income tax to SARS, and pay regulation fees (e.g., mall clothing shops, supermarkets). Informal businesses are unregistered, keep no official records, and do not pay taxes (e.g., roadside vendors, spaza shops, informal car washers).

What are the three categories of businesses that entrepreneurs can start?

Manufacturing businesses (produce goods, e.g., clothing, cakes), Trading businesses (sell ready-made products, e.g., food, cosmetics), and Service businesses (offer services, e.g., car washing, hairdressing).

How do health epidemics such as tuberculosis (TB), cholera, and HIV/AIDS impact businesses?

Employee absences cause decreased productivity and lost business income. Additionally, affected local consumers divert available funds toward healthcare costs, leading to decreased retail sales.