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EMS - Notes (Checkpoint)

Specialization occurs when people concentrate on what they are best at, which can increase efficiency but risks boredom or stopped production if specialized workers are absent. Opportunity cost is the next best alternative given up when choosing an item. Added value is the difference between a product's selling price and material/component costs. The three economic sectors are primary (extracting resources), secondary (manufacturing), and tertiary (providing services).

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33 views2 pages

EMS - Notes (Checkpoint)

Specialization occurs when people concentrate on what they are best at, which can increase efficiency but risks boredom or stopped production if specialized workers are absent. Opportunity cost is the next best alternative given up when choosing an item. Added value is the difference between a product's selling price and material/component costs. The three economic sectors are primary (extracting resources), secondary (manufacturing), and tertiary (providing services).

Uploaded by

Nkateko Mathye
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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OPPORTUNITY COST

Is the next best alternative given up by choosing another item.

SPECIALISATION
Occurs when people and businesses concentrate on what they are best at.

Advantages Disadvantages
 Increases efficiency and output  Workers become bored specialising in
 Less time is wasted one job – efficiency might fall
 Quicker and cheaper  If a worker is absent and no can do the
job – production might be stopped

ADDED VALUE
Is the difference between the selling price of a product and cost of bought-in materials and
components.

Selling price of product – materials and bought-in costs = added value

 Increase price
 Reduce material costs

STAGES OF ECONOMIC ACATIVITY

 Primary sector
This involves the Earth’s natural resources.
Activates include: farming; forestry; extraction of natural resources.
 Secondary sector
Converting natural resources into manufactured goods.
Activities include: building; construction; bread baking.
 Tertiary sector
Providing services to consumers and businesses.
Activities include: transport; retail; insurance

MIXED ECONOMY

Private sector Public sector


Not government owned Government owned
Make own decisions The government makes decisions
Aim to make profit Doesn’t aim to make profit
Some government Money comes from taxpayers
PRIVATE LIMTED COMPANIES
the company is a separate legal entity:

 The company would continue to exist even if the partners die.


 A company can make contracts and legal agreements.
 Company accounts are kept separate from the accounts of the owners.

People can buy shares in the company shareholders appoint directors to run the business. -
directors are the most important.

Benefits Limitations
Raise capital from sale of shareholders Cannot cell share to public
Limited liability for shareholders Legal formalities
Separate legal identity Accounts are available for public to see
Continuity Not easy to transfer shares

CHARACTERISTICS OF AN ENTREPRENEURS

Hard working Optimistic Independent


Risk taker Self – confident Effective communicator
Creative Innovative

BUSINESS SIZE
business size can be measured by:

 The number of employees


 Value of output
 Value of sales
 Value of capital employed

INTERNAL AND EXTERNAL GROWTH

 Internal growth
Opening another location.
 External growth
Takeover or merger with another business.

Horizontal growth Same industry


Vertical growth Same industry – different stage of production
Conglomerate Different industry

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