Business Activity: Scarcity and Factors of Production

• Business activity addresses the economic problem of unlimited wants and limited resources, creating scarcity.
• Scarcity arises from a lack of sufficient products to satisfy the population's total wants.
• It is the want for a good or service beyond what is essential for living.
• The shortage of resources to produce these wants and needs leads to an economic problem.
• Factors of production are limited in supply.

Four Factors of Production (FOP)

• Capital includes the finance, machinery, and equipment required to make a product or service (e.g., a stand mixer for a baker).
• Labour refers to the people who combine factors to produce goods or services (e.g., an owner of a restaurant).
• Land encompasses all natural resources used in production (e.g., office space, fields).
• Entrepreneurship involves combining the other three factors (capital, labour, land).

Limited Resources and Economic Problem

• Limited resources lead to scarcity, causing choices and opportunity costs, impacting the value of what didn't get chosen.
• Specialization involves people or businesses concentrating on what they are best at.
• Division of labour splits production processes into different tasks, performed individually, forming a type of specialization.
• One result of division of labour results in increased worker efficiencies

Advantages of Division of Labour

• Workers become trained and specialize in tasks, increasing efficiency and output.
• Less time is wasted moving from one workspace to another.

Disadvantages of Division of Labour

• Workers can become bored doing one job, reducing efficiency.
• If one worker is absent, production may stop if nobody else can do their job.
• Production is less without that worker

Purpose of Business Activity

• People have unlimited wants.
• The factors of production supply are in limited demand, creating a shortage and economic problems.
• Choosing a route of best alternative, leads to opportunity cost.
• Specialization improves the efficient use of resources.

Added Value

• Added value is the difference between the selling price of a product and the cost of bought materials and components.
• Factors to increase added value include location, after-sales service, brand recognition and/ or marketing

Factors that can increase Added Value

• Increased general qualities
• An ideal location
• Health benefits
• Appealing Packaging

Classification of Business: Economic Sectors

• The three economic sectors are primary, secondary, and tertiary.
• The primary sector involves the extraction of raw materials(e.g., farming).
• The secondary sector focuses on the manufacturing process (e.g., baking bread).
• The tertiary sector involves retail products or services (e.g., retailer, real estate agent).
• The CSA (Community Supported Agriculture) sector includes minerals, fresh water, sugar, oranges, and is an increasingly exported value

Importance of Natural Resources in South Africa

• South Africa's natural resources support mining, tourism, and agriculture such as Table mountain sight seeing.
• Supports employment especially for people with informal education.
• Offers opportunity to increase exportation leading to increased GDP in foreign currency terms

Preservation of Natural Resources

• Some natural resources are renewable, while minerals are not.
• Conserving resources is a responsiblity.

Protecting the Environment

• Actions to protect the enviroment
• Plant more trees
• Do not waste water
• Use renewable energy

Primary Sector Labour

• A primary skilled labourer: does not require formal education.
• Types of skills in the primary sector require manual labour such as construction furniture makers.

Secondary Sector

• Preservation resources in the secondary level have an increased degree on availibility.
• The water, air , noise pollution have an impact on society.
• Types of shills secondary secor requires an important source of job cruation.
• Includes specific training , but formal based ducation.

Tertiary Sector

• Contributes heavily to South Africa's economy.
• The preservation of natural resources in this sector has a more indirect impact.
• Knowledge of sustainable resources is extremely important.
• Skills typically required in the tertiary sector include formal base skills, creative thinking, problem-solving skills and competence with technological tools.

Business activity tackles scarcity, the core economic problem arising from unlimited wants and limited resources. Scarcity forces choices due to insufficient resources for production. Factors of production—capital, labour, land, and entrepreneurship—are limited, leading to opportunity costs.