Factors of Production

Flashcards based on lecture notes about Factors of Production.

What are the four factors of production?

Capital, Entrepreneurship, Labour, and Land/Natural Resources.

Why are factors of production important?

Without them, there can be no production of goods and services in the economy.

What is the remuneration for Capital?

Interest

What is the remuneration for Entrepreneurship?

Profit

What is the remuneration for Labour?

Wages/Salaries

What is the remuneration for Land/Natural Resources?

Rent

What is Capital in business terms?

Any money or assets that an owner of a business puts into the business.

What are the two main sources of Capital?

Own Capital and Borrowed Capital.

What are the two types of Borrowed Capital based on repayment period?

Long Term/Fixed Capital and Short Term/Working Capital.

What is Fixed Capital used for?

To buy fixed assets such as land and buildings, vehicles, and equipment.

What is the purpose of a Capital Budget?

It is a long-term financial planning tool used to plan the fixed capital requirements for a business.

What is Working Capital used for?

To purchase stock and keep cash in the business to pay for everyday expenses.

What is the purpose of a Cash Budget?

It is a short-term financial planning tool used to plan working capital requirements.

What does an Entrepreneur do?

Coordinates and combines the other three factors of production to produce goods and services.

What is Entrepreneurship?

The process of taking the risk of starting and running your own business.

What are intrapreneurs?

People within a company who are innovative, committed, hard-working, and energetic but are not the owners.

What does Labour include?

All efforts (mental and physical) used to create goods and services.

What are the four categories of Labour?

Unskilled, Semi-skilled, Skilled, and Professional Labour.

Give examples of Unskilled Labour.

Petrol attendants, gardeners, grocery packers, car guards, farm workers, and porters.

Give examples of Semi-skilled Labour.

Switchboard operators, factory workers, and cashiers.

Give examples of Skilled Labour.

Hairdressers, plumbers, and construction workers.

Give examples of Professional Labour.

Lawyers, doctors, accountants, and engineers.

What does Remuneration refer to?

The amount of money the employee receives for the work that has been done.

What is Commission?

Payment based on the number or value of items sold.

What does 'salary plus benefits' remuneration mean?

A salary plus additional benefits such as medical aid and a pension fund.

What does 'cost to company' remuneration mean?

A salary package that includes all the costs the business incurs for that employee.

What are some responsibilities of employees?

Doing work in a professional and honest manner, being on time, being accountable, and reporting important matters.

List some responsibilities of employers.

Paying workers, providing a safe working environment, and providing required equipment, training, and support.

Why should employers treat employees fairly and look after them?

Workers are a business's greatest asset; without them, a business cannot be productive or make a profit.

What is the aim of the Basic Conditions of Employment Act (BCEA)?

To impact positively on the conditions of employment of workers in South Africa, improving working conditions of vulnerable workers.

List some benefits in the BCEA that ensure workers are treated fairly.

Working hours, leave, public holidays, notice of termination, and deductions.

What is the aim of the Employment Equity Act?

To eliminate unfair discrimination in employment and provide for affirmative action.

What is Black Economic Empowerment (BEE)?

An act that supports the development and economic empowerment of historically disadvantaged people.

What is the aim of Broad-based Black Economic Empowerment (B-BBEE)?

To address the shortcomings of the Employment Equity Act, BEE, and Affirmative action.

What is the purpose of the Skills Development Act?

Forces people to pay a monthly contribution to the SETA to promote training and development.

What is the purpose of the Occupational Health and Safety Act?

Ensures that employers provide safe and healthy working conditions.

What do Natural Resources include?

All the raw materials that are converted into finished products by businesses during the manufacturing process. This factor of production is also referred to as Land.

What are Characteristics of Natural Resources?

Natural resources are scarce and exhaustible, and cannot usually be increased or replaced by humans.

Give examples of natural resources exports of South Africa

Minerals (Gold, diamonds, platinum, chrome, coal and iron ore) and agriculture (Sugar cane, grapes, oranges, maize wheat, corn, sunflowers and tobacco

Why Water is considered an importante natural resource?

All businesses and households cannot survive or function without water.