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Economic & Management Sciences

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Jason Collins, Nazlie Mohamed & Habiel Adams

Jason Collins, et al.

3-in-1
Grade 8 EMS 3-in-1 CAPS
CLASS TEXT & STUDY GUIDE

This Grade 8 EMS 3-in-1 Class Text & Study Guide provides a user-friendly introduction to a subject that often poses a
challenge to Grade 8 learners.

All three subject areas are presented in an accessible way with clear explanations complemented by examples and
illustrations to build confidence in the learner and educator.

Key Features:
• Curriculum-aligned, comprehensive notes
• Learner-friendly diagrams
• Concept-focussed activities with detailed answers
• Examination papers with memos
• Photocopiable template book
 8
GRADE

EMS
Economic & Management
CAPS Sciences
3-in-1 Jason Collins, Nazlie Mohamed & Habiel Adams

THIS CLASS TEXT & STUDY GUIDE INCLUDES

1 Comprehensive Notes

2 Topic-based Questions

te eBook
s epara
3 Full Solutions Includ
e s a
E BOOK
available
L A T
TEMP DULE
1
f o r M O ACY
IA L LITER
C
Plus a bonus Exam Paper and Memo FINAN

2022 publication | ISBN: 978-1-991261-00-7

 CONTENTS
MODULE 2 THE ECONOMY ............................................ 41
Exam Assessment ........................................................................................... i

TOPIC 1 Government ................................................................................ 41

MODULE 1 FINANCIAL LITERACY............................ 1

TOPIC 2 National Budget ........................................................................... 51

TOPIC 3 Standard of Living ........................................................................ 62

TOPIC 1 Introduction to Accounting concepts, equation & cycle ...... 2
TOPIC 4 Markets .......................................................................................... 73
TOPIC 2 Cash Receipts and Cash Payments Journals ........................... 14

TOPIC 3 Posting Cash Journals to the General Ledger MODULE 3 ENTREPRENEURSHIP ................................. 77
& Preparing a Trial Balance ....................................................... 22
TOPIC 1 Factors of Production ................................................................... 77

TOPIC 2 Forms of Ownership ...................................................................... 90

TOPIC 3 Levels and Functions of Management ...................................... 106

MODULE 1 ANSWERS ....................................................................................... 113

MODULE 2 ANSWERS ....................................................................................... 125

MODULE 3 ANSWERS ....................................................................................... 130

EXAM PAPER 1 ................................................................................................ 142

EXAM PAPER 2 ................................................................................................ 144

MEMO EXAM PAPER 1 ..................................................................................... 147

MEMO EXAM PAPER 2 ..................................................................................... 150

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 1
MODULE 1 FI NANCIAL L ITER AC Y
Accounting Introduction ............................................................................................... 1
ACCOUNTING INTRODUCTION
TOPIC THE INTRODUCTION TO ACCOUNTING
1 CONCEPTS, EQUATION & CYCLE ............................ 2 The focus of this module is one of the aspects of
management that is common to all businesses; ACCOUNTING.
Accounting is the process of recording and processing
Accounting Concepts ................................................................................................... 2
financial transactions into usable information. A transaction is
Accounting Equation ..................................................................................................... 6 any exchange entered into by a business involving buying or selling.
Accounting Cycle .......................................................................................................... 12
Accounting records are prepared for use by the managers in a business
to assist them in their managerial duties. In addition to managers, there
TOPIC CASH RECEIPTS AND are other users of the information. They are:

2 CASH PAYMENTS JOURNALS ................................. 14

1 OWNER(S) – to see whether the business is making a profit or a loss.
Recording transactions in the Books of First Entry....................................................... 14

Recording transactions in the Cash Receipts Journal (CRJ) ..................................... 16

2 EMPLOYEES – to gain insight into the business for which they work.
Recording transactions in the Cash Payments Journal (CPJ) ................................... 18

3
Recording in both the CRJ and the CPJ ..................................................................... 21

CONTENTS | FINANCIAL LITERACY

INVESTORS – to see whether they should invest in a business.

POSTING CASH JOURNALS TO THE GENERAL

4
TOPIC
LENDERS – to see whether they should lend money to the business.
3 LEDGER & PREPARING A TRIAL BALANCE ....... 22

General Ledger .............................................................................................................. 22 5  OVERNMENT TAX AGENCY – to calculate how much tax is owed
G
by the business.
Posting the Cash Receipts Journal (CRJ) .................................................................... 25

Posting the Cash Payments Journal (CPJ) ................................................................... 27

Accounting is an important aspect of any business and a function that
Posting both the CRJ and the CPJ to the General Ledger....................................... 30 needs to be completed within a legal framework.
Balancing and Totalling Accounts ............................................................................... 33

Preparing a Trial Balance .............................................................................................. 38

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 1 TOPIC INTRODUCTION TO ACCOUNTING
PROFIT MOTIVE

1
• Every business aims to earn a profit.
CONCEPTS, EQUATION & CYCLE
Profit = Income – Expenses

ACCOUNTING CONCEPTS REMEMBER

It is important to remember that when
TOPIC 1 | INTRODUCTION TO ACCOUNTING CONCEPTS, EQUATION & CYCLE

Accounting transactions are recorded, they

SOLE TRADER are recorded from the business's perspective.
A business owned by only one person, who usually manages it too.

SERVICE & TRADING BUSINESSES CLASSIFICATION OF ACCOUNTS

Service Business ASSETS OWNER'S EQUITY LIABILITIES

Car wash, taxi driver, dressmaker, Non-Current Long-term

Assets Owner's Personal Accounts liabilities
tour guide, plumber, hairdresser, • Capital
teacher, caterer, etc. • Loan
Current income Fixed Assets • Drawings
refers to income • Mortgage bond
Service businesses generate income by • Land and • Vehicle finance
received by
performing a service: buildings Expenses Income
service business for
• Vehicles • T rading license • C urrent
rendering services to
• T he main income earned by these • Equipment • Material costs income
customers.
businesses is called current income. • Stationery • R ent
• Telephone income
• T he main expense of performing their service is referred to as • W ater and • Commission
material costs. Current Assets electricity income Current liabilities
• Trading stock • S alaries and • Creditors
• Debtors wages control
Control • P acking material • Bank overdraft
Materials refers to Material costs or materials • Bank • Advertisements • SARS
the resources used in may also be referred to as • Cash Float • Insurance
providing a service. consumable goods. • Petty Cash • Rent expense
• Repairs

Trading Business (covered in Grade 9)

Fruit stall, coffee shop, garden nursery, pharmacy, bakery, etc.

Trading businesses generate an income by selling goods at a profit to

other businesses/consumers.
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DEFINITIONS OF ACCOUNTS Capital 1
Assets The owner's initial investment in the business Capital refers to the
is known as Capital. owner’s money used
to start a business.
Assets refer to possessions bought by the business that
can be used for a long time and will enable the business Owner's Equity
to earn a profit. Assets also include cash.
OWNER'S EQUITY
Owner's financial interest in the business

TOPIC 1 | INTRODUCTION TO ACCOUNTING CONCEPTS, EQUATION & CYCLE

T he table below shows the various types of assets that a business,
Business owes this amount to the owner
e.g. a laundromat, can own.
Net value of the business
ASSETS Owner's personal accounts
Fixed or Non-Current Assets
Amount invested in the business by the owner when starting
Capital
Assets that the business usually keeps for longer than 12 months the business
The premises owned by the E.g. a laundromat has Money/stock (goods) that the owner withdraws for their own
Land and Drawings
business – excluding any property bought the premises from personal use
Buildings
that the business rents which it operates
Income
E.g. the delivery van used
Vehicles All vehicles owned by the business Current Income earned by the business for services rendered, e.g.
by the laundromat
income income earned for laundry services
E.g. the washing machines
Items that are used by the business Commission
Equipment and tumble dryers used by Income earned by the business, e.g. selling a house
in order to produce goods/services income
the laundromat
Current Assets Rent income Income earned by the business for renting out land or buildings

Assets a business owns which are either cash or

• Owner’s Equity is not limited to the initial investment made by the
are expected to be turned into cash during the next 12 months
owner as it changes when the business earns an income.
Bank is the record of money in a business which increases when
Bank
money is earned and decreases when money is spent • Owner's Equity also increases when the business's income increases.
Income increases the profit which belongs to the owner.
Cash float Cash in the cash register
A small amount of money that is used in a business, • Owner’s Equity also decreases when the business incurs an expense.
Petty cash
e.g. stationery Expenses decrease the profit which belongs to the owner.
Trading • Income INCREASES the Owner’s Equity and
stock Trading Stock refers to the items (stock) that a retailer sells expenses DECREASE the Owner’s Equity.
(Grade 9 only) Owner’s Equity
refers to the owner’s
Debtors financial interest in
A debtor is a company or person to whom you sell on credit
control the business.
and they pay their accounts at the end of each month
(Grade 9 only)

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 1 Liabilities

Expenses refer to any item purchased by the business

that is consumed (used up) in the running of the
Liabilities refers to money that the business
business. Expenses include items used to generate
owes to another person or business.
an income for the business.

Often a business does not have enough cash to buy an expensive item;
the business will then borrow money to buy the item. The table below
EXPENSES
shows the various types of liabilities.
TOPIC 1 | INTRODUCTION TO ACCOUNTING CONCEPTS, EQUATION & CYCLE

There are many different expenses that a business can incur.

LIABILITIES
Material The components used when E.g. detergent used in a Long-term liabilities or Non-current liabilities
costs rendering a service laundromat
Long-term or non-current liabilities have to be paid back
over a period LONGER than 12 months
The weekly amount paid to E.g. the driver who drops off A loan to buy business premises E.g. the land and
Wages Mortgage
employees the deliveries of the laundry that is usually paid off over buildings from which the
bond
10 – 20 years laundromat operates
The monthly amount paid to E.g. the office administrator Vehicle A loan to buy the required E.g. the delivery vans used
Salaries finance vehicle/s for a business to drop off the laundry
employees at the laundromat
E.g. the laundromat
E.g. placing an advert bought new industrial
Money that has been borrowed
All amounts paid in order to about the specials at Loans irons and took out a loan
Advertising from a financial institution
promote the business the laundromat in the which will be paid off over
community newspaper 5 years
Short-term liabilities or Current liabilities
Water and These are 'consumed' by the E.g. the laundromat will use
Electricity business lots of water and electricity Short-term or current liabilities have to be paid within 12 months or LESS
E.g. the laundromat buys
Creditors A supplier from which the business
E.g. all the paper slips that detergent and softener
Pens, pencils and paper used in control buys on credit
Stationery are attached to a laundry from Unilever Wholesalers
the business
order
E.g. the laundromat used
A situation where the bank allows the bank overdraft facility
E.g. insurance on the Bank
The monthly cost to insure an you to spend more money than as it did not have enough
Insurance washing machines, tumble overdraft
asset for a specific time period the balance in your Bank account money to pay wages this
dryers and delivery vehicles week
Money owed to the government
E.g. the laundromat has
If a business does not own its E.g. the rental paid for (SARS – South African Revenue
Rent SARS to pay tax on the profits
premises, it may need to rent the shop space used by the Service) on personal income and
expense earned
premises laundry on profits in the business

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 1
ACTI VITY 1 ACTI VITY 2
Calculate the Owner’s Equity in each of the Classify the following as either Expenses or Assets:
following examples:
Vehicles, Bank, Fuel, Equipment, Salary, Advertising,
1. The owner, M. Madenyuka, starts a new business by investing Material costs, Land and Buildings, Stationery, Wages
capital of R85 000. The business makes a profit of R44 000 for
the year. During the year, M. Madenyuka withdrew amounts
totalling R24 000. ASSETS EXPENSES

TOPIC 1 | INTRODUCTION TO ACCOUNTING CONCEPTS, EQUATION & CYCLE

2. A. Nketsu invested capital of R100 000 in her business.
The business earned R124 500 in income during the year while
incurring expenses of R66 500. A. Nketsu withdrew a total of
R56 000 during the year.
ANSWERS p. 113

ASSETS vs EXPENSES
ANSWERS p. 113

An ASSET is an item of value that is owned by a business. An EXPENSE is an

item that is consumed when used. The VEHICLE is an asset while the FUEL
is an expense. As the car is driven, the fuel is consumed, however the car
remains unchanged.

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 2
MODULE 2 THE ECONOMY
TOPIC
GOVERNMENT .............................................................. 41 TOPIC
1 GOVERNMENT
1
Definition of Government .............................................................................................. 42
Government's Interaction with Households ................................................................. 44
Government's Interaction with Business ....................................................................... 48 DEFINITION OF GOVERNMENT

• Roles of government
TOPIC
NATIONAL BUDGET .................................................... 51 • Different levels of government
2
Definition of National Budget ........................................................................................ 51 GOVERNMENT’S INTERACTION WITH HOUSEHOLDS
Government Revenue .................................................................................................... 52

• The government buys factors of production from households

• The government levies taxes on households
TOPIC
STANDARD OF LIVING .............................................. 62
3
GOVERNMENT’S INTERACTION WITH BUSINESS

CONTENTS | THE ECONOMY

Standard of Living ........................................................................................................... 63
Impact of Development on the Environment ............................................................. 66
• The government provides resources and services to business
Unemployment................................................................................................................. 68
The productive use of Resources to promote a Healthy Environment ..................... 71 • T he government creates an orderly
and lawful business environment
• T he government provides support
TOPIC and advice to business
MARKETS ....................................................................... 73
4 • T he government earns tax from
business

Definition of Markets ....................................................................................................... 73

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 2 DEFINITION OF GOVERNMENT ROLES OF GOVERNMENT
Some of the main roles are:

Making and enforcing laws

Government refers to the group of individuals who act The government makes and enforces laws to promote order in society.
together in order to exercise control over a country. Examples include:
• you may only vote in an election when you are at least 18 years of age
• you cannot purchase alcohol if you are under 18 years of age
In South Africa, the government is elected • you can only drive a vehicle if you have a driver’s license which you
through a democratic process by the citizens can get at 18 years of age
of the country. Citizens are allowed to vote in
National Elections once they turn
18 years of age. The government comprises Providing public goods and services
of representatives of the citizens of the
The government provides public goods
country and act on their behalf.
and services that citizens need
to lead functional and
In June 2022, Stats SA estimated that the South African population was productive lives. Examples include: Public goods and services
60,6 million. The government is therefore tasked with a huge responsibility in are provided by the
• healthcare clinics and hospitals
ensuring and promoting the wellbeing of more than 60 million people. government for all citizens
The government performs many different roles including law-making, • education facilities such as schools, of a country. A public good
providing goods and services and protection of citizens. universities and technikons is tangible, e.g. a road,
• roads, traffic lights, airports and whereas a public service is
non-tangible, e.g. a doctor’s
railway stations
diagnosis of an illness.

All of these public goods are referred to as infrastructure.

The more developed the infrastructure of a country,
the more functional it becomes.
TOPIC 1 | GOVERNMENT

Protecting citizens
The government protects citizens from internal and external threats.
Examples include:
• police protection (from internal threats) is necessary so that citizens feel
safe in their communities
• army protection (from external threats) is necessary when a country is at
war with other countries
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DIFFERENT LEVELS OF GOVERNMENT Local government 2
The South African government has three levels to efficiently and effectively Each of the nine provinces is divided into municipalities. The municipalities
perform its functions: consist of districts, towns or cities that are all governed by a local
government.
• National government
• Provincial government South Africa has 278 municipalities each of which deal with issues that affect
their particular district. Municipalities report to the provincial government.
• Local government
Examples of their roles include refuse removal, electricity supply and
housing.
National government
National government is also known as central government. National National Government Provincial Government
government has supreme rule over South Africa. National government controls the country controls a province
deals with issues that affect the entire country. Examples include: foreign
affairs, safety and security, unemployment and international trade.
LIMPOPO
National Government has three branches:
A
NG
GAUTENG MALA
• L egislative branch (makes laws) – responsible for making the laws of the NORTH
WEST MP
U

country and consists of the South African Parliament.

FREE KWAZULU-
STATE NATAL
• E
 xecutive branch (leads the country) – leads the country and consists of NORTHERN CAPE
Beaufort West

the President, Deputy President and Ministers. Saldanha WESTERN CAPE

EASTERN Worcester Oudtshoorn
Paarl
• J udicial branch (serves justice) – ensures that justice is served if laws WESTERN
CAPE
Cape Town Stellenbosch
George
Swellendam
CAPE
that are made by Parliament are broken. It consists of the Constitutional
Strand Mossel Bay

court, the Supreme court, the High court and the Magistrates' courts.
Local Government
controls municipalities
Provincial government
Provincial government is also known as regional government.

TOPIC 1 | GOVERNMENT
In South Africa, there are nine provinces and each provincial government
deals with issues that affect that particular province. Each province's
provincial government is led by a premier. WEST COAST

EXAMPLE In 2021 the Eastern Cape experienced a severe drought and CENTRAL KAROO

the Eastern Cape provincial government was tasked with the CAPECAPE
WINELANDS

responsibility of dealing with it. WINELANDS

GARDEN ROUTE
CITY OF
CAPE
TOWN
OVERBERG

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 2 GOVERNMENT’S INTERACTION
ACTI VITY 1 WITH HOUSEHOLDS

The government provides public goods and services that are needed
1. In which year did South Africa become a democracy? (1)
for households and businesses. The resources required by government
to enable the provision of these goods and services, are known as the
2. Who was the first democratically elected President of factors of production.
South Africa? (1)
There are four factors of production: Land is also referred to
• Capital as Natural resources.
3. Provide one example of a law that specifically applies to
• Entrepreneurship
your age category. (2)
• Land
• Labour
Factors of production
4. Choose the correct word between brackets:
refer to the resources
4.1 South Africa has (nine/ten) provinces. that are used within
Use C E L L to remember the the production
4.2 National government is also known as (central/main) 4 factors of production. process to provide
goods and services.
government.

4.3 Refuse removal in Soweto is administered by

(provincial/local) government. FACTOR OF REMUNERATION
DEFINITION EXAMPLE
PRODUCTION (payment)
4.4 (National/Provincial) government makes laws that
all the money and goods that machinery
affect the entire nation. Capital are invested in the business so vehicle interest
that production can occur equipment
4.5 (Malls/Pavements) are an example of public goods. 5  1 (5)
individual identifies trade
opportunities and takes the
5. Which province in South Africa has the biggest population Entrepreneurship risk to start a business and owner/s profit
TOPIC 1 | GOVERNMENT

but is the smallest in size? (1) organises the other factors of

production
[10]
all the natural resources
ANSWERS p. 125 farm
(inputs) that are used
Land factory rent
within the business so that
mine
production can occur

all the mental/physical effort

(skilled/ unskilled) that is workers salaries/
Labour
used in the business so that (employees) wages
production can occur
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 EXAMPLE Luvuyo Madenzuka (entrepreneur) owns a small farm (land)
where she produces olives and bottles olive oil. She currently
Households who are employed by the government are known as civil
servants. Civil servants sell their labour to the government and in return 2
employs five workers (labour) and has recently landed a earn a monthly salary.
contract to supply a restaurant with her olive produce. She has
approached a bank to secure a loan (capital) to expand her Examples of civil servants include doctors working at government hospitals,
productivity on the farm. traffic officers, police officers, and teachers working at government schools.

When the government builds a new hospital, it will need land for the
THE GOVERNMENT BUYS FACTORS OF PRODUCTION building. If the land is privately owned, the government will either buy the
land from the owner, or they may decide to rent it from the owner.
FROM HOUSEHOLDS
The government needs billions of rands annually for all their expenditure in
terms of providing public goods and services, so sometimes they may need
Households are individuals who live together and own to borrow capital.
the factors of production (capital, entrepreneurship,
land and labour). When the government provides public goods and services, it assumes the
role of the entrepreneur.

All households need an income to fulfil their needs and wants. Most
households have at least one factor of production that they are able
to sell and earn an income. This factor of production is usually labour. Public corporations are government-owned,
run and controlled businesses that provide
Households sell their labour and in return, they earn a salary or wage.
public goods and services.

The government can also be called

the state or the public sector. Public corporations are also referred to as state-owned enterprises (SOEs).
Privately-owned businesses aim to make maximum profits, but government-
The government provides public goods and services and therefore assumes owned enterprises are not motivated to earn a profit. Their main role is to
the role of the producer. The government will need all the necessary ensure that citizens have access to goods and services that ultimately benefit
resources to produce public goods and services. them and improve their standard of living.

TOPIC 1 | GOVERNMENT
EXAMPLE If the government decides to build a new hospital, it will Examples of state-owned enterprises include Transnet (providing public
need factors of production. Governments purchase factors transport) and ESKOM (providing electricity).
of production from households and use them to produce
public goods and services.

Teachers and doctors who work for private schools and hospitals
are employed in the private sector whereas teachers and doctors
who are employed by the government, work in the public sector.

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 2 The interaction of the government with households is schematically
represented below.
THE GOVERNMENT LEVIES TAXES ON HOUSEHOLDS
In order to provide public goods and services, the government needs
money to produce them. This money is raised through taxes that it charges
Government's interaction with Households households and businesses.

Factors of Production
Taxes are compulsory payments made by
eurship •
pren Lan households and businesses to the government.
tre d
En •
• L
al

ab
t
pi

ou
Ca

Types of taxes

r
In South Africa, the South African Revenue
Service (SARS) is responsible for all tax- Revenue is just another
word for income!
related matters. There are three
Households Government We refer to the charging

es
ag
In

re categories of taxes that are collected

te

s t• s/ W of taxes as the levying

Pro rie from households: personal income tax, of taxes as this is the
fit •
Rent • S ala consumption tax and excise tax. correct economic term.
Payment for Factors of Production
Personal income tax
Personal income tax is levied on salaries and wages earned by households
and is also known as Pay As You Earn (PAYE). South Africa uses a progressive
 ouseholds sell their factors of production (capital, entrepreneurship,
• H rate of income tax which means that households who earn a higher
land and labour) to the government. salary will be levied with a higher rate of taxation than their lower earning
counterparts.
• In return they receive an income in the form of: interest, profit, rent and
salaries or wages. EXAMPLE A
 n individual who earns R50 000 a month will pay 25% per
month in income tax, while someone who earns R10 000 per
month will pay 7% per month in income tax.
TOPIC 1 | GOVERNMENT

Consumption tax
Consumption tax is levied when goods and services are bought
and consumed.

The most common form of consumption tax is Value-Added Tax (VAT)

which is currently levied at 15%. VAT is added onto all goods and services
sold (except VAT-exempt products which will be discussed later). This tax is
collected by businesses and paid to SARS on the consumer's behalf.

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 3
MODULE 3 E NTR EPR ENEU R SHIP
TOPIC
FACTORS OF PRODUCTION ................................... 77 TOPIC
1 FACTORS OF PRODUCTION
1
Introduction to Factors of Production........................................................................ 78
Natural Resources (Land)............................................................................................. 79
INTRODUCTION
Labour............................................................................................................................ 80
Capital........................................................................................................................... 84 • Concepts
Entrepreneurship........................................................................................................... 85

NATURAL RESOURCES (LAND)

• Non-renewable resources and renewable resources

TOPIC
FORMS OF OWNERSHIP.......................................... 90 • The importance of natural resources as a factor of production
2
LABOUR
Introduction to Forms of Ownership ........................................................................... 91
Sole Trader..................................................................................................................... 93
• Categories of labour
Partnership..................................................................................................................... 95
• The importance of labour as a factor of production

CONTENTS | ENTREPRENEURSHIP
Closed Corporation...................................................................................................... 97
• The role of labour (workers) in the business
Private Company.......................................................................................................... 98
• Fair employment practices
Public Company........................................................................................................... 100

CAPITAL

TOPIC LEVELS AND FUNCTIONS • Money capital and real capital

3 OF MANAGEMENT ................................................... 106 • The importance of capital as a factor of production

Three Levels of Management ..................................................................................... 107

ENTREPRENEURSHIP
Management Tasks ..................................................................................................... 107
• Characteristics of entrepreneurs
Different Styles of Management................................................................................. 109
• The importance of entrepreneurship as a factor of production
Characteristics, Skills and Values of good Management........................................ 110
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3 INTRODUCTION TO FACTORS OF PRODUCTION CONCEPTS

Production is the process of creating goods and

Production services to satisfy the needs and wants of society
Production is the process of creating goods and services and of the various participants in the economy.
to satisfy the needs and wants of society and
of the various participants in the economy. The factors of production are the basic inputs
Factors of production
required for production to take place.

Production needs to take place for a functional economy to exist. Basic Natural resources are most often described as the
Natural resources
inputs are required for production to take place. These basic inputs are gifts of nature and are commonly known as land.
known as the factors of production which will be elaborated in this section.
To produce goods and services, the factors of production need to be Labour refers to all mental and physical efforts of
combined correctly. Labour human beings in the production process in return
for remuneration.
There are four factors of production:
• Land
 / Natural Resources Capital refers to all the money that is invested in
Capital
the business so that production can occur.
• Labour

• Capital
 Entrepreneurship is the process of combining
• Entrepreneurship
 Entrepreneurship natural resources, labour and capital into products
and services.

An entrepreneur is an individual who takes

Entrepreneur calculated risks and is able to identify business
TOPIC 1 | FACTORS OF PRODUCTION

opportunities in the market.

The reward or payment provided for the use of the

Remuneration
factor of production.

Capital goods such as machinery, tools,

equipment, and property, as well as updated
Capital goods
technological resources are used to produce a
variety of consumer goods and services.

The BCEA provides a framework and guideline

Basic Conditions of
for the terms and conditions of employment for
Employment Act (BCEA)
employers and employees.

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NATURAL RESOURCES (LAND) • Natural resources therefore, need to be transformed to satisfy the needs
and wants of consumers. 3
• The remuneration for natural resources is rent.

Natural resources are

most often described as
the gifts of nature and are NON-RENEWABLE RESOURCES AND
commonly known as land. RENEWABLE RESOURCES
Non-renewable resources
• T hese gifts of nature include all aspects of nature originating from
below the earth, on top of the earth, including the sea and the sky.
Non-renewable resources cannot be replaced
• Natural
 resources include: mineral deposits in the ground, water, wildlife, once they have been extracted.
vegetation and marine resources.
Example
Once Brent crude oil is extracted from the earth, it
• N
 atural resources are scarce, i.e. there is a limited quantity available.
can never be replaced again.

• A
 price is attached for the use of natural resources because they are
not freely available.

• Natural
 resources differ from region to region and from country to
country because climatic conditions differ around the world. Renewable resources

TOPIC 1 | FACTORS OF PRODUCTION

• The
 climatic conditions around the world also influence the availability,
quality and quantity of natural resources. Renewable resources can be replaced once they have
been extracted.
• N
 atural resources are an essential element required in production
and people use them in various ways. Example
Cattle and crops can be replaced by nature once they have
been used.
• N
 atural resources often cannot be used in their natural form and
require some form of processing to serve as a product or to be The reckless use of renewable resources may result in the
meaningful for consumers. exhaustion thereof – therefore they must be used in a responsible
way so that they are available for future generations.

Consumers are people who purchase goods

and services from the business.

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