Economic and Management Sciences Grade 7 Learner's Book PDF

 CAPS t S cienc es nag e m e n Economic and Ma ea rner’s Book e 7 L Grad J. Bantjes D. Kerdachi A. Kriel K. Mzolo It is il...

 CAPS t S cienc es nag e m e n Economic and Ma ea rner’s Book e 7 L Grad J. Bantjes D. Kerdachi A. Kriel K. Mzolo It is illegal to photocopy any pages from this book without the written permission of the copyright holder. EMS Today Grade 7 Learner’s Book Maskew Miller Longman (Pty) Ltd Forest Drive, Pinelands, Cape Town website: www.mml.co.za © Maskew Miller Longman (Pty) Ltd 2013 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder. Every effort has been made to trace the copyright holders of material produced in this title. We would like to apologise for any infringement of copyright so caused, and copyright holders are requested to contact the publishers in order to rectify the matter. First published in 2013 ISBN 978-0-636-14014-1 Editor: Deanne Vorster Cover photo: Sean Wilson Cover design: MML Studio Illustrator: Annelise Meyer Photo acknowledgements p. 1 MFfoto/bigstock; pp. 3 & 4 Cape Archive; p. 6 Mushakesa/bigstock; pp. 7 & 10 iStock; p. 11 rbird/bigstock; p. 13 a) Guy Stubbs/Independent Contributor/Africa Media Online, b) marmion/bigstock, c) elenthewise/bigstock, d) nrhuboc/bigstock; p. 21 iStock; p. 24 a) Jan van der Poll, b) nruboc/bigstock, c) mocker/bigstock, d) Guy Stubbs/Independent Contributors/Africa Med; p. 30 jtinjaca/bigstock; p. 30 a) b) c) jlye/bigstock; p. 32 Hroe/iStock; p. 35 Hans Lenherr/PictureNet Africa; p. 41 africa11/bigstock; p. 47 iStock; p. 54 Gallo Images – LKIS; p. 57 Yastremska/bigstock; p. 59 Cecilia L/bigstock; p. 65 Andres/bigstock Photo; p. 68 Ken Hurst/bigstock; p. 74 Baloncici/bigstock; p. 77 Danie Nel/big stock Photo; p. 84 George Fairbairn/bigstock; p. 88 a) aasimon/bigstock, b) Viktorus/bigstock, c) Elzbieta Sekowska/bigstock; p. 90 Micky Wiswedel/iStock; p. 94 Jan van der Poll; p. 95 Mano Africa/iStock; p. 97 buketbariskan/bigstock; p. 100 Gallo images/Stuart Fox; p. 115 Gallo Images/Stuart Fox; p. 118 a) Jan van der Poll, b) sonaye/iStock, c) Kakhimullin/iStock, d) David Pickett/ DIS; p. 125 a) GREATSTOCK/CORBIS, b) Crowman/iStock, c) Rapid Eye/iStock, d) Izusek/iStock, IS2/bigstock; p. 128 Pryzmat/bigstock; p. 130 a) GREATSTOCK/CORBIS, b) Kbrowne41/bigstock, c) Meunierd/bigstock; p. 131 Mattattak/bigstock; pp. 133 & 134 iStock; p. 136 a) Michael Jung/bigstock, b) Gallo images/Getty Images; p. 137 a) Nikky Tok/bigstock, b) Jim Glab/bigstock, c) Jim Glab/bigstock; p. 139 a) Gallo, b) iStock; p. 145 a) Chic Type/iStock, b) Shutter Worx/iStock, c) Izaokas Sapiro/iStock, d) Shkurd/ bigstock; p. 152 Radubalint/bigstock; p. 153 a) & b) AFP PHOTO/Anna Zieminski, c) Danie Nel Photography CC/iStock; p. 155 Gallo Images; p. 159 Olga Miltsova/ bigstock; p. 160 Ricardo Azoury/iStock; p. 165 David Pickett/DIS; p. 169 a) nruboc/ bigstock, b) Kurhan/bigstock, c) nruboc/bigstock  Contents Term 1 Topic 1 History of money........... 1 Unit 5 How to recycle and reuse Unit 1 Traditional societies and goods to satisfy needs bartering............. 2 and wants........... 32 Unit 2 Money and electronic Summary............................. 34 banking.............. 5 Unit 3 The role of money...... 9 Topic 4 Businesses................ 35 Summary............................. 12 Unit 1 Formal and informal businesses............ 36 Topic 2 Needs and wants........... 13 Unit 2 Types of businesses in Unit 1 Types of needs........ 14 the formal and informal Unit 2 Primary and secondary sector............... 40 needs............... 18 Unit 3 The advantages and Unit 3: Limited resources to disadvantages of formal satisfy needs and wants 21 and informal businesses 42 Summary............................. 23 Unit 4 The role of formal and informal businesses as Topic 3 Goods and services........ 24 producers and Unit 1 Goods and services.... 25 consumers........... 45 Unit 2 Producers and Unit 5 The effect of natural consumers........... 27 disasters and health Unit 3 The role of households epidemics on formal and as producers and informal businesses.... 47 consumers........... 28 Summary............................. 50 Unit 4 Using goods and services efficiently and effectively............ 30 Term 2 Term 1 Revision........................ 51 Unit 2 Personal Statements of Net Worth........... 71 Topic 5 Accounting concepts...... 54 Unit 3 Business income and Unit 1 Accounting concepts: capital, expenses............. 72 assets and liabilities.... 55 Unit 4 Savings and investments Unit 2 Income and expenses.. 57 in business........... 74 Unit 3 Profits and losses...... 58 Summary............................. 76 Unit 4 Banking, savings and budgets............. 60 Topic 7 Budgets.................. 77 Unit 5 Financial records and Unit 1 Definition of a budget, transactions.......... 62 income and expenditure 78 Summary............................. 64 Unit 2 Personal budgets...... 81 Unit 3 Business budgets...... 84 Topic 6 Income and expenses...... 65 Unit 4 Savings, buying and Unit 1 Personal income and planning............. 86 expenses............. 66 Summary............................. 86 Term 3 Term 2 Revision........................ 87 Topic 10 Entrepreneurs’ Day....... 115 Unit 1 Hosting an Entrepreneurs’ Topic 8 The entrepreneur......... 90 Day............... 116 Unit 1 Definition of an Unit 2 Calculating your profit or entrepreneur......... 91 loss............... 122 Unit 2 Characteristics and skills 93 Summary............................ 124 Unit 3 Entrepreneurial actions. 96 Summary............................. 99 Topic 11 Inequality and poverty... 125 Unit 1 Causes of socio-economic Topic 9 Starting a business....... 100 imbalance........... 126 Unit 1 Needs and wants of Unit 2 Inequality in South consumers.......... 101 Africa.............. 129 Unit 2 Use of recycled Unit 3 Education and skills to materials........... 103 fight inequality and Unit 3 SWOT analysis....... 104 injustice............ 134 Unit 4 Setting and achieving Unit 4 Urban and rural goals............... 105 challenges.......... 136 Unit 5 Advertising.......... 106 Unit 5 Creating sustainable job Unit 6 Budgeting for opportunities........ 139 Entrepreneurs’ Day... 108 Summary............................ 141 Unit 7 Costing............. 110 Summary............................ 114 Term 4 Term 3 Revision....................... 142 Topic 13 Savings.................. 165 Unit 1 Personal savings...... 166 Topic 12 The production process... 145 Unit 2 Banks.............. 168 Unit 1 What is production?.. 146 Unit 3 Community savings Unit 2 Inputs and outputs... 150 schemes............ 173 Unit 3 Sustainable use of Unit 4 Financial institutions and resources........... 152 organisations promoting Unit 4 Meaning of economic entrepreneurship..... 174 growth............. 154 Summary............................ 176 Unit 5 Productivity......... 156 Term 4 Revision....................... 177 Unit 6 The effect of productivity Glossary............................. 180 on economic growth.. 158 Index................................ 184 Unit 7 Technology in the production process... 159 Unit 8 Contribution of technology to improving productivity and economic growth. 161 Summary............................ 163 Topic 1 History of money The economy Topic overview Discuss how people trade in traditional Discuss the development of coins and societies. paper money. Explain bartering. Explain electronic banking. Discuss the development of money. Explain the role and function of Explain promissory notes. money. 1 Topic 1 Unit 1 Unit 1 Traditional societies and bartering Today, when people buy something, they usually use money to pay for it. But this has not always been the case. In traditional societies there was no money as we know it. People did not use coins or paper money to buy the things they key word needed. They had other ways of trading. In this unit you will learn more about barter – trade how traditional societies traded goods by bartering. that takes place without money; goods and services Traditional societies are exchanged for one another A long time ago, people had to produce all the goods and services that they needed. There were no markets and people did not trade. Therefore, there was a very limited range of goods and services available. People’s standard of living was low because they had to produce everything that they needed themselves. This kind of society, where people produce all the things that they need, is called a subsistence economy. With the passing of time, people in traditional societies realised that they could have a greater number and range of goods if they specialised in the production of only a few things. By focusing their efforts on the production of something they were good at making they could produce a surplus. This surplus could then be traded with other people. As a result of specialisation, more goods were produced and a greater range of goods and services became available to people. subsistence economy – a way of living where people produce everything they need key words themselves specialise – to focus on one thing and become really good at it surplus – more of something than is needed Activity 1.1 Describe economic life in a traditional society 1. Suppose that you are part of an economy in which there are no markets, no money and no trade. In this economy, individuals have to produce all the goods and services they need or want. 2. Work with your partner and complete the following tasks: a) Make a list of the goods and services you would choose to produce. Explain why you chose to produce these goods and services. (3) b) Describe the problems that you would experience in this economy. (3) c) Suggest ways in which these problems could be solved. (2) 2  Unit 1 Topic 1 Soon markets began to develop where people could bring the goods they had produced and trade them with other people. There was no money to shop with in those days. People had to trade by exchanging goods with one another. This kind of trading where goods are swapped and no money is used is called bartering. Bartering When people barter, they exchange goods without using money. People bartered because money had not been invented yet. Although some people still Markets developed as a place where people could barter, people don’t often trade in this way anymore. bring their goods to trade with others. Problems with bartering key word Bartering is inefficient because, before trade can happen, each person must market – a place where people want what the other person has, and must be willing to trade for it. This come together to makes trading complicated and time consuming. As a result of this problem, buy and sell goods money was invented to make trade easier. Barter is often regarded as an old-fashioned means of trading. Today, bartering is seldom used because money makes trade much more efficient. For instance, in an economy that has money, an apple farmer who needs shoes simply has to find a shoe shop to buy shoes. In a barter economy, the apple farmer would have to find not just a shoe producer, but one who happened to want apples at a time when he wanted shoes. Activity 1.2 Investigate the difficulties of bartering 1. This activity will allow you to experience what life was like in an economy that did not have money. 2. Imagine that you are a producer. You are going to trade with other learners in your class so you will have to try to produce what the consumers (the learners in your class) want. Decide what product (good) you want to produce. 3. Once you have decided what product you want to produce, complete the following tasks: a) Divide a sheet of A4 paper into four equal pieces. b) On each of the four pieces of paper draw a product that you know your classmates would want to have. You must draw the same product on all four pieces of paper. Ensure that the quality of your drawing is of a high standard, otherwise no one might want your products. 3 Topic 1 Unit 1 c) You will be given a chance to advertise your product to the rest of the class by telling everyone what you have made and explaining why they should trade for this product. d) Once you have seen what other learners have produced, decide what products you would like to have. You will be given five minutes to trade (by barter) to get the products you would like. You may need to make many trades to get the products you want. Remember you do not have to trade if you do not want to. Did you know? Even after money was invented, people still continued to barter with one another. Portuguese sailors were still trading with the local inhabitants of KwaZulu-Natal at the port of Durban in the 15th century. Activity 1.3 Describe your experience of bartering 1. Think about your experience in Activity 1.2. 2. Now answer the following questions on your own in your exercise book: a) Why do individuals trade with one another? (2) b) Did everyone in your class get the products they wanted? Why not? (2) c) How many trades did it take to get the products you wanted? Why? (2) d) Who benefited when you made a trade – you or the person you were trading with? (2) e) What could be done to make trading easier in this game? (2) f) What happens if businesses make goods and services that consumers don’t want to buy? (3) g) What happens to businesses that produce goods and services that many consumers want? (3) h) In trade of this nature, who has more power – the consumer or the producer? (2) i) Write a brief description of what life would be like in South Africa today without money. (3) 4  Unit 2 Topic 1 Unit 2 Money and electronic banking In today’s modern economy we usually use money to buy the things we want. key word Money, like fire and the wheel, has been around for a very long time, but as money − any object you have learned there was a time when money did not exist. No one knows (such as notes or coins) that can exactly when money came into existence, although we do know that many be exchanged for different items have served as money in the past. In this unit you will have the goods or services opportunity to learn more about how money and banking developed. indirect trade – trade that occurs when money is Money makes it easier used to pay for goods or services to trade The use of money allows for indirect trade. In indirect trade, individuals accept money for the products they have produced and then use the money to purchase other goods and services. Money makes trade much simpler and faster. Money is used to make trade easier. The development of money Many items, such as shells, tobacco and furs have been used as money in the past. Cattle were often used to trade in the past and continue to be used, not only in rituals and ceremonies, but also as a form of money. The practice of measuring an individual’s wealth by the amount of cattle they have is common throughout Africa. Precious metals, such as gold and silver, were also used as money in many ancient societies and civilisations. Different forms of money that were used in the past 5 Topic 1 Unit 2 Promissory Note Promissory notes I, Jane Monroe, do promise to pay City Finance Co. the A promissory note is a piece of paper on sum of R50 000. Repayment is to be made in the form of which one person writes a promise to pay 300 equal payments at 6% interest, or R322,15 payable on the other person a certain sum of money at the 1st of each month, beginning 8/1/2005 until the total some time in the future. It is like an ‘I owe debt is satisfied. you’ given to someone as a promise to pay Signed, them in the future. Jane Monroe ____________________ The earliest forms of promissory notes 7/1/2005 ____________________ were first used in China as early as the 8th century. There is also evidence to show that An example of a promissory note something similar to promissory notes were key word used by Arab merchants between the 10th and 13th centuries. Since then, promissory note − a they have been used in most economies as a type of money that is issued by piece of paper on a private individual. The idea of a promissory note developed into what we which one person writes a promise know as paper money today. Promissory notes were the first type of paper to pay the other money that existed in history. person a certain sum of money at some time in the Coins future No one knows exactly when or where the first coins were made. There is evidence that coins were being used in ancient Greece as early as 650 B.C. Since then coins have been the most commonly used form of money. Coins have been used in South Africa as a form of money since 1652 when Jan van Riebeeck founded the settlement at the Cape. At that time, Spanish coins (the basic coins used in the Netherlands) were the most commonly used coins in South Africa. Other coins in circulation Examples of some early coins included copper doits (from Did you know? Banjarmasin in Indonesia) and Dutch The first money silver ducatoons. There were also many coins from India in use in South Africa issued in South (including silver rupees, gold pagodas and mohurs). Other coins in circulation Africa was called the rix dollar. included Japanese kobans, English guineas, Portuguese joannes as well as Russian roubles. 6  Unit 2 Topic 1 Paper money The first forms of paper money were used in China during the 7th century. Later, paper money was introduced in the Mongol Empire and throughout Europe and America. Since then paper money has been extensively used in all countries of the world. In 1782, paper money was introduced for the first time in the history of the Cape Colony by the Dutch Governor Van Plettenberg. This early paper money was issued in rix dollar and stiver denominations, the currency of the Cape at that time. Because there was no printing press in the Cape at the time, all the notes, until about 1803, had to be hand written and stamped with an official government stamp. After 1803, all notes were printed. Did you know? In South Africa our money is called rand. The rand has the symbol ‘R’ and is subdivided into 100 cents. We use the symbol ‘c’ for cents. Our money takes its name from the Witwatersrand, the ridge upon which Johannesburg is built and where most of South Africa’s gold deposits were found. The rand was introduced as the official currency of the country in 1961. Before then the British pound sterling was used as currency. Activity 1.4 Use money to trade 1. You are going to repeat Activity 1.2 using money as a medium of exchange. 2. Use an A4 sheet of paper and make ten R5 notes. Once you have made your money and produced your products, you will be given five minutes to trade. Try to make the best deals possible, using any combination of goods or money. You can make as many trades as you want to but you do not have to trade. 3. After the trading session is over, discuss the following questions as a class: a) Did you get the goods you wanted? Why or why not? (2) b) Did using money make it easier or more difficult to make a trade? Why? (2) c) When you made a trade or purchase, who benefited? How do you know? (2) d) What could you do next time to ensure that you get the goods you want? (2) 7 Topic 1 Unit 2 Electronic banking We are now moving into a period of history where computer technology is changing the way people spend their money and buy and sell goods. Many people buy goods on the internet and pay for them electronically without any notes or coins being exchanged. This kind of ‘electronic money’ or ‘digital currency’ will be the money of the future. Today people can use their computers, cell phones and iPads or tablets to do their banking. Money can be transferred electronically and Electronic and online banking has made it much easier for people to keep control of their money. people can be paid electronically without going into a bank or standing in a queue waiting to be served. This has made it much easier for people to keep control of their money and conduct business. Advantages and disadvantages of electronic banking There are many advantages of electronic banking. These include: Electronic banking saves time since you do not need to go to a bank or stand in long queues in order to carry out transactions. Electronic banking is convenient since it allows you to carry out your banking at any time and from anywhere in the world. Electronic banking is efficient since transactions are processed much more quickly through the use of computers. The single biggest disadvantage of electronic banking is security. If someone has access to your password and log in details it is possible for them to take control of your money and to make payments from your bank account. For this reason, if you make use of electronic banking, you have to make sure that your personal information like your password, user name and pin number of your bank account is kept in a safe place. 8  Unit 3 Topic 1 Unit 3 The role of money When money is used to make trade easier it is known as a medium of exchange. Using money as a medium of exchange makes trade more efficient key word because it reduces the time and resources needed to find a trading partner. medium of exchange – an Because trade takes place more easily and time is saved, producers are able item that is to spend more time on the actual production of goods and services. When used to make money is used as a medium of exchange in trade, producers can specialise in trade easier, for example, notes what they produce. Specialisation in production leads to greater productivity and coins; money which in turn leads to the production of a greater quantity of goods and is a medium of exchange services. Because a greater quantity of goods and services are available, there is a higher standard of living. Characteristics of money For money to be an effective medium of exchange, it should have certain characteristics. These include: The item used as money should be relatively scarce. Items that can be easily found or copied are not a good form of money. key word The item should be durable. Items that break or fall apart and lose their durable – lasts for a long time and is form should not be used as money. not easily broken The item should be portable. Items that cannot be easily carried around or or used up transported are not a good form of money. It should be possible to divide the item used as money into smaller parts. Items that cannot be broken down into smaller units are not suitable as a form of money because it is difficult to give people change. We usually think of money as being notes and coins. However, money does not only consist of notes and coins. Other means of payment that we use include cheques, debit cards and credit cards. An example of a cheque 9 Topic 1 Unit 3 Activity 1.5 Discuss the characteristics of money Working with a partner, discuss the answers to the following questions and then individually write down the answers in your exercise book. 1. Copy and complete the following table, by deciding if these items possess the four characteristics of money. Is the item Is the item Is the item Can the item relatively durable? portable? be divided scarce? into smaller units? Sand Shells Coins Cheques Notes (20) 2. Add an item of your choice to the bottom of the table. Assess whether the item you have chosen would be a good form of money by completing the table. (4) Current forms of money Money was originally a physical item, like gold and silver. It could even be alive – as we have seen, cattle are one of the oldest forms of money. Today, much of the money used by individuals is still in the form of notes and coins but we also use other forms of money. In the modern economy the following forms of money are used: Notes and coins. Many payments are still made using key word metallic coins and paper cheque − a written money. instruction to a Cheques. A cheque is a written bank ordering them to pay a instruction to a bank ordering certain sum of them to pay a certain sum of money to the Notes changing hands person named on money to the person named on the cheque the cheque. The money is paid from the bank account of the individual who writes and signs the cheque. Digital money. We are now moving into a period of history where computer technology is changing the way people spend their money and buy and sell goods. Many people buy goods on the internet and pay for them electronically without any notes or coins being exchanged. People also 10  Unit 3 Topic 1 settle debts by transferring money electronically from their bank account key words into other people’s bank accounts. When payments are made in this way we bank card – a say that electronic money or digital money is being used. piece of plastic with particular Bank cards. Bank cards can sometimes be characteristics used to make payments and purchase goods issued by a bank and services. Typically two kinds of bank which allows the holder to make cards are used to make payments: credit payments and cards and debit cards. Credit cards are conduct electronic banking cards issued by the bank which allow the credit card – a type holder to borrow money in order to make of bank card which allows the payments. Debit cards are cards issued by holder to borrow the bank which allow the holder to use money in order to make payments money that they have already deposited in debit card – a type the bank to make payments. Credit and debit cards are of bank card other forms of money. which allows the holder to use Characteristics of bank cards money that they A bank card is a piece of plastic with particular dimensions (size and shape) have already deposited in the and characteristics. Bank cards are used to conduct electronic banking at ATMs bank to make (automatic teller machines) and make payments. payments Bank cards are a form of money. As such they have the following characteristics of money: Bank cards are scarce. They have particular security features which prevent people from copying them. Bank cards are durable. They do not easily fall apart or lose their form. Bank cards are portable. They can be easily carried around. Bank cards are divisible. They can be used to pay for goods of any price. Bank cards usually show the following information: The name of the bank that issued the card. The identity of the card holder (their name) and signature. A unique card number. The date on which the card expires. A security feature (such as a magnetic strip or electronic chip) to ensure that people do not make their own fake bank cards. 11  Summary Unit 1 Traditional societies and bartering In early traditional societies there was no money or trade. People had to produce or grow everything they needed. When people started to specialise in the production of items they were good at making, they produced a surplus which could be traded. At first, trade took place by bartering. Bartering occurs when people swap goods without using money to trade. The problem with bartering is that it is a slow and difficult way to trade. Unit 2 Money and electronic banking Money developed in order to make it easier for people to trade. Money enables indirect trade to occur. Many items, such as shells, tobacco and furs, have been used as money in the past before coins and paper money were introduced. A promissory note is a piece of paper on which one person writes a promise to pay another person a certain sum of money at some time in the future. Current forms of money include notes and coins, bank cards, cheques and digital money (payment via the internet). Today people can use their cell phones and computers to do electronic banking without having to go into a bank. Unit 3 The role of money Money is anything that is used as a medium of exchange (that is, anything that is used to enable trade to take place). Money has four important characteristics that make it a sustainable medium of exchange: (1) it is scarce; (2) it is durable; (3) it is portable; (4) it can be divided into smaller units. It is possible, that in the future, coins and banknotes will become as out of date as cowrie shells and whales’ teeth. 12 Topic 2 Needs and wants The economy Topic overview Analyse the basic needs of individuals, Discuss the unlimited wants of families, communities and countries. individuals and the problem of scarcity. Discuss primary and secondary needs. Explain why resources are limited. Explain how needs are satisfied. Discuss the economic problem. 13 Topic 2 Unit 1 Unit 1 Types of needs There are many things that we need in order to stay alive. There are also many key words things that we want that we don’t actually need, but they make our lives need – something you have to have better in some way. A need is something you have to have, something you in order to stay can’t do without. Water and food alive are good examples of things that want – something needs you would like to satisfy needs. If you do not eat have but do not and drink you will not be able to need survive. A need is different from a want. A want is something you would like to have but it is not necessary for your survival. Music and cell phones are good examples of things that satisfy wants. In this unit you will learn more about wants basic needs of individuals, families, communities and countries. The difference between needs and wants Basic needs of individuals and families All individuals have certain basic needs that have to be satisfied in order for them to survive. These basic needs include the need for food, water, shelter and security. Activity 2.1 Think about your basic needs 1. Imagine that you have no money and that you have to leave home and live by yourself. Make a list of the ten most important things that you would take with you. (10) 2. Read through the lists of two of your class mates and then discuss the following questions: a) Are there some things that are on all your lists? What are they and what do these things have in common? (3) b) What things do you have on your list that other learners don’t have? Why did you put these things on your list? (3) c) Do you think it is possible to list all the things that you might need if you left home? Why? (2) Individuals generally do not live alone. They live together in families and other small groups. Living together in groups makes it easier for individuals to satisfy their basic needs. In economics we call groups of people who live 14  Unit 1 Topic 2 together households. Sometimes households are made up of family members key words and sometimes they are individuals who have decided to live together. The households – groups basic needs of families and households are the same as those of individuals. of individuals Families need food, water, shelter and security. (such as family members) who live together Activity 2.2 Investigate the basic needs of individuals Imagine that you have been shipwrecked on the island of Lala. You have nothing with you except the clothes that you are wearing, a copy of the map on the right, and a wet matchbox with five matches in it. While exploring the island to find out what resources are available, you discover that: There are fruit and berries in the forest. There are fish in the sea that you can eat, but you need to find ways to catch them. Goats run wild in the mountains and there are snakes in the desert. It is hot in the daytime and cold at night. You can only drink the river water if you boil it first. There is very little chance of being rescued, so you will probably have to live on the island for the rest of your life. 1. Imagine that you are the only survivor of the shipwreck. Think of the things that you will have to do in order to survive. Write down what you will do each day of the first week. (7) 2. Now discuss and write a survival plan for a group of six. In your plan, you must be sure to answer the questions below: a) What are the first things you will do on the island? Which needs will you satisfy by doing this? (3) b) What resources are on the island? Are any of them limited or scarce? Can any of the resources be used for other purposes? If so, what can they be used for? (6) c) What problems will limited resources lead to? (2) d) Do you think that your community will ever have everything that it needs? Give reasons for your answer. (2) e) What have you learnt about using limited resources to meet unlimited wants and needs? (2) key words community – a large group of people Community needs who live or work together A community is a large group of people who live or work together in a collective – particular place. When people live or work together they have certain belonging to everyone collective needs. Examples of these collective community needs are: 15 Topic 2 Unit 1 key words the need to be protected from criminals public goods – the need for education and training things that the the need for medical care government provides that the need for entertainment, sport and recreation. everyone in the community uses, It is the responsibility of local and provincial government to meet the for example a park public services collective needs of a community. Community needs and wants are satisfied – services that by the provision of public goods and services. Examples of public goods and the government provides that services are: everyone in the street lights a police force community needs, for example water roads buses and trains and electricity hospitals libraries standard of living You will learn more about public goods and services in the next topic. – the level of income, wealth, comfort, In some communities the standard of living is high because the community material goods and necessities is able to satisfy many of its needs. In other communities, where resources available to a are more limited and not many public goods and services are provided, the person standard of living is low. Activity 2.3 Discuss community needs and how these are satisfied 1. List five needs that your local community has today that you think people in South Africa did not have 300 years ago. Discuss why these needs may have changed. (5) 2. Look at the pictures below and on the next page showing three different communities in South Africa. Find the public goods and services provided in each of the three communities. There are nine public goods and services provided in community A, five in community B and only one in community C. On your own, list the public goods and services provided in each community in your exercise book. (15) A 16  Unit 1 Topic 2 B C Pictures showing three different communities 3. Where does the government get the money to provide public goods and services for all citizens? (2) 4. Which public goods and services do you think are the most important and why? Use your own ideas, as well as the things shown in the pictures, to list ten public goods and services from the most important (1) to the least important (10). (5) 5. Are exactly the same public goods and services important in all communities? If not, why not? (3) The needs of a country Just as a community of people have certain needs, so too a country has needs. For example, there is a need for law and order in a country. There is also a need for protection from attacks or invasions from other countries. The national government of a country is established to make sure that these needs are satisfied. The government satisfies the country’s need for law and order by setting up a legal system with laws, courts and prisons. The government will also establish a defence force to protect the country from external threats. 17  Topic 2 Unit 2 key words Unit 2 Primary and secondary needs primary needs − In Unit 1 you learned about the basic needs of individuals, families, our most basic survival needs, communities and the country. In this unit you will learn more about the which include our different kinds of needs that individuals have and how these can be classified need for food and water (physical into primary and secondary needs. needs) and our need for safety (security needs) Primary needs secondary needs Primary needs are our most basic survival needs. These are the things we have − needs that to have in order to stay alive. There are two groups of primary needs: physical develop once our basic primary needs and security needs. needs have been satisfied (for example, our Physical needs social needs and Physical needs are the needs that our bodies have for food, water and sleep. self-esteem needs) If these physical needs are not met our bodies cannot function properly. Examples of physical needs are: the need for oxygen to breathe the need for food to eat the need for water to drink the need to sleep the need to be protected from the weather (the cold and the heat). Security needs The need to drink People need to feel safe and secure. Examples of security water is an example of needs are: a physical need. the need to feel that others will not hurt us the need to feel that our belongings will not be taken or broken by others the need for structure, rules, law and order the need to know that we live and work in a safe environment. The need to feel safe Physical and security needs are known as primary needs is an example of a because people usually try to satisfy these needs first. security need. Secondary needs In addition to our primary survival needs, people have other needs such as a need to belong and a need for social interaction. These are known as secondary needs. There are two important groups of secondary needs: social needs and self-esteem needs. 18  Unit 2 Topic 2 Social needs People like to have friends and be part of a group. A person’s desire to be part of a network of people is known as a social need. Examples of social needs are: the need to have friends the need to be part of a team or group the need to feel that we belong somewhere the need to give and receive love. Self-esteem needs The need to have Our self-esteem is the way we feel about ourselves. Individuals with a good friends is an example self-esteem believe that they are capable and worthy people. Individuals with a of a social need. poor self-esteem do not believe in their abilities and lack confidence. Our self- esteem needs are needs that must be met for us to feel good about ourselves. Examples of self-esteem needs are: the need to achieve success the need to be good at something the need to feel that what we do is important and valuable the need to be recognised and feel that others respect us. Activity 2.4 Demonstrate understanding of primary and secondary needs 1. Explain the difference between primary and secondary needs. (4) 2. Copy and complete the following table in your exercise book. Need What type of need is this? Order of importance according to your needs The need to achieve The need to be safe success is an example of a self-esteem The need to be loved need. The need to be part of a group The need for activity The need to achieve success (10) How do people satisfy their needs? One of the ways in which people satisfy their needs is by making or buying goods and services. Goods are objects that we can see and touch. Examples of goods are cars, clothes and houses. Services, on the other hand, are things we cannot touch, such as education, medical care and rubbish removal. You will learn more about goods and services in the next topic. 19 Topic 2 Unit 2 People produce or buy only those goods that they believe will satisfy their needs. In the same way, producers only produce goods and services that they know will meet people’s needs. In other words, the desire to satisfy people’s needs and wants is the driving force behind all economic activity. People work to make money to buy goods to satisfy their needs. People’s unlimited wants Human beings seem to have unlimited needs and wants. The moment one need is satisfied, people develop a desire for something else. People are thus driven to buy more and to have more. Getting and owning more and more is one of the driving forces behind economic activity. Activity 2.5 Demonstrate your understanding of the different types of needs 1. Look at each of the items in the pictures below and identify what kind of need this item would satisfy: b) a) c) e) f) d) (6) 20  Unit 3 Topic 2 Unit 3 Limited resources to satisfy needs and wants In Unit 2 you learned that individuals seem to have unlimited needs and key words wants. However, the resources available to satisfy people’s needs and wants resources – the are limited. In this unit you will learn more about how the problem of scarce things we use to resources results in people having to make decisions about which needs to produce goods and services satisfy and what goods and services to produce. scarce – only a small or limited quantity Resources are scarce available non-renewable All the items that are used to produce goods and services are called resources. resources – There are many different kinds of resources, including: resources that can run out and can’t land metals power be replaced supplies crops buildings renewable resources – resources that transport animals equipment can be replaced labour water machinery and will never run out Can you add other resources to this list? Resources are often limited or scarce. Because there is a limited quantity of resources available we cannot always satisfy all our needs. We call resources which will run out completely one day non-renewable resources. Oil, for example, is a non-renewable resource. Some resources won’t run out because we are able to make more, or because nature replaces the supply. There is always heat and light from the sun for us to use, for example, and we can grow more trees to produce wood and paper. These are called renewable resources. Resources are not only scarce, they are also unevenly distributed. For example, some areas are rich in natural resources, while other areas have hardly any natural resources. This uneven distribution of resources leads to some places in the world being very rich while others are very poor. Another important characteristic of resources is that most resources can have many different uses. Water, for example, can be used for drinking, washing or for irrigating crops. Because resources are limited, we have to choose how best to use them. We have to be careful how we use the resources we have so that we can continue to satisfy our needs and wants. Water is a limited resource that can be used for drinking and washing. 21 Topic 2 Unit 3 Activity 2.6 Demonstrate your understanding of the characteristics of resources 1. List five limited resources. (5) 2. List four ways in which each of these limited resources is used. (4) 3. Write a paragraph about how we can use each of these limited resources so that they don’t run out. (4) 4. List as many examples of renewable resources as you can. (5) 5. Can we use any of these renewable resources instead of the limited resources? Explain. (2) key words economic problem The economic problem – having unlimited The economic problem which we all face is that needs and wants we have unlimited needs and wants but limited but limited resources to satisfy resources to satisfy them. This problem of scarcity them is known as the economic problem. Because it is scarcity – not enough of impossible to meet all of our needs and wants, we something have to choose which ones we will be able to satisfy. economics – the study of needs Economics is the study of how people decide which and how to satisfy them needs to satisfy and how to satisfy these needs. The problem of scarcity is also the economic problem. 22  Summary Unit 1 Types of needs A need is something you can’t do without if you want to survive. A want is something you would like to have, but it is not necessary for your survival. The basic survival needs of an individual include: the need for food, water, shelter and security. Groups of individuals who live together are known as households. A community is a large group of people who live or work together in a particular place. Communities have collective needs such as the need for roads and education. Collective needs are met through the provision of public goods and services. The needs of a country are met by the national government. Unit 2 Primary and secondary needs Primary needs are our most basic survival needs. There are two types of primary needs: ° physical needs ° security needs. Secondary needs are those things that we would like to have but that are not essential for our survival. There are two types of secondary needs: ° social needs ° self-esteem needs. People purchase goods and services to satisfy their needs. People seem to have unlimited needs and wants – the moment one need is satisfied they develop a desire for something else. Unit 3 Limited resources to satisfy needs and wants Resources are those things that we use to produce goods and services. Resources are limited. Because resources are scarce, we cannot satisfy all our needs and have to then decide which goods and service to produce and purchase. The economic problem is also known as the scarcity problem. The economic problem is a result of the fact that people have unlimited needs and wants while the resources available to satisfy these needs and wants are limited. 23  Topic 3 Goods and services The economy Topic overview Describe what goods and services are. Explain why efficient production of List examples of goods and services. goods and services is important. Identify who produces goods and services. Explain why efficient use of goods and Identify who consumes goods and services is important. services. Explain why effective production of Examine the role of the household as a goods and services is important. producer. Explain why effective use of goods and Explain the role of the household as services is important. consumer. Explain how to reuse and recycle goods in the home. 24  Unit 1 Topic 3 Unit 1 Goods and services What are goods and services? Goods and services are the things people consume in order to satisfy their needs and wants. Individuals satisfy their needs by making or buying goods key words and services. People and businesses need money to buy the things that will goods – things that we consume satisfy their needs and wants. An individual or a business that buys goods and services – work done services is called a consumer. Another word for goods is products. for the benefit of another This topic will look at why goods are made, what services are for sale, and who consume – to use up or finish provides and uses goods and services. consumer – a person or business that Everything that people need or want is made by people. For example, a consumes bricklayer builds a house, and organisations, such as an oil refinery, produce petrol. When households make the things they need, for example, bake their own bread, they can save money by not going out and buying a loaf of bread. However, households cannot make everything they need or want. For those things that a family needs or wants, that they cannot make for themselves, they need money. To get money, you need to work and sometimes you need to save to be able to buy a certain item. Not all needs can be satisfied; sometimes alternative needs have to be satisfied. At other times a need or want will not be satisfied at all. Some needs that people have are a major concern for the government, for example, the delivery of water to households. A renewable resource like water is both a good and a service. When water is Water is a need. key words a need, it is a good and when government delivers government agency it to your house, it is a service. Water has to be collected, stored and treated – an organisation before it can be delivered to households for drinking, cooking and washing. like Umgeni Water, that supplies water to Goods the people who Goods are the things that we can see and touch, like bread or a pair of shoes. live and work in Durban; or Eskom, The things (goods) that people need and want are made by: that generates people or individuals electricity and delivers it to households the homes and companies, by factory workers factories of Southern Africa government agencies. 25 Topic 3 Unit 1 Services Services are generally things that we cannot see or touch. Services help people live better lives and can be to the benefit of the individual or the community. Small businesses such as a hair salon provide a service cutting people’s hair, while large organisations such as universities and hospitals provide educational and medical services. Services such as electricity supply or garbage removal are services that will benefit the whole community. Generally individuals and businesses produce goods and services so that they can make a profit from their sales. They use these profits to make their businesses grow by opening more shops and then make bigger profits in the future. Examples of goods and services Examples of goods are cars and busses that transport people, clothes and houses that protect and shelter people and the food that we eat. Examples of goods Services, on the other hand, are things which we cannot touch, such as education, medical care and rubbish removal. Education is a service. Activity 3.1 Identify goods and services that satisfy needs and wants 1. Bring a few old magazines and newspapers to class. 2. Cut out five pictures that show goods that you would purchase that would satisfy a need or want. (5) 3. Name the good and what need or want is satisfied when you use it. (10) 4. Find three pictures or adverts from the magazine that show a service to the people of a community. (3) 5. Say what type of service it is. What need or want is satisfied when people buy and consume these services? (2) 26  Unit 2 Topic 3 Unit 2 Producers and consumers Producers and consumers A producer is the person, household, business or government agency that key word finds out what people need or want. They will then design and manufacture producers – people a product or service to satisfy this need. For example, the development of or organisations social media, like Facebook, Twitter, Skype and even e-mail, has seen cellular who make or develop goods telephone manufacturers improve cell phones. Things that we could only do and/or services on computers before, can now easily be done on cell phones and tablets. Products and services change and develop as people change and develop. Mxit has been replaced with BBM and WhatsApp as the main methods of text communication. A business makes items that they think people will need, and then tries to sell as many as they can to grow their profit. The more popular their product is, the more they will sell. The desire to satisfy people’s needs and wants is the driving force behind economic activity. People work to make money, to buy goods and to satisfy their needs. A consumer uses the goods and services that have been made by the producers. This means that individuals, households, companies and government agencies are all consumers. They are all interdependent on one another as they compete with each other for the limited resources available. For example, a baker produces fresh bread, but consumes water and electricity that the government agencies provide. When the government plans for the future water needs of a community it is the supplier. But before it can become a supplier, the government will be a A baker is producer of bread but also a consumer consumer. For example: of water and electricity that the government They employ geologists and surveyors to find the provides. best place to build a new dam. Then government must decide where the water will be purified, so that it is clean enough for the people to drink. Engineers will be employed to design the dam, reservoirs and pipelines needed to transport the water from the dam to the purification plant and then on to the homes and businesses for people to use. Builders and labourers will be employed and materials will be bought. To be a producer and supplier of goods (water) and services (the delivery of the water to our homes), the government agency must first be a consumer of goods (building materials) and services too (survey and engineering services). 27 Topic 3 Unit 3 Unit 3 The role of households as producers and consumers key words The role of a household as a producer entrepreneurs – There are people who do not want to work for other people but rather want people with skills that start their to be their own boss. Entrepreneurs such as electricians or architects, who own businesses start their own businesses, will often start their business from home. This will operating costs – keep the operating costs down. These people will produce goods: the architect costs of running a business draws up building plans and the electrician repairs electrical appliances or does home electrical installations. Many people lose their jobs when factories close down. Factories close down when local businesses start importing goods such as clothes from China. Businesses import goods because labour could be cheaper in other countries and this makes the imported products cheaper than the local ones. Unemployed South Africans can, however, use the skills they developed in their previous jobs to provide goods and services to their communities from home, for example, dressmakers. Activity 3.2 Study local businesses that are run from home 1. Walk around your neighbourhood and record the number of different businesses that operate out of homes. a) List the different types of businesses you see. (2) b) Note whether the business sells a product or a service. (2) c) Describe the business that looks the most profitable. Give a reason for your answer. (2) d) Does anyone in your family run a business from home? Describe the business. (2) The role of a household as a consumer Households must first satisfy their basic survival needs by buying food, clothing and shelter. Once these lower order needs are satisfied, households will consume goods that will satisfy higher order needs and wants. When a household has enough water, food, clothing, and shelter, they will start consuming other products. For example, they will protect their family by fencing their homes and buy goods such as TVs and DVDs for entertainment. 28  Unit 3 Topic 3 Activity 3.3 Examine the cost of a basic need The Constitution says that everyone must have access to basic goods key words and services. Water is a basic necessity, so big cities in South Africa like constitution – all the Johannesburg, Durban or Cape town gives all families 300 litres of free water laws governing a per day. This is called the water grant. country grant – an allowance 1. Study the municipal account for a resident below and answer the which means that following questions about the water used by this family in one month. no payment is required REFERENCE ACCOUNT DETAILS AMOUNT BALANCE BROUGHT FORWARD 1896.02 PAYMENT – THANK YOU 1896.02CR ELECTRICITY ACCOUNT ==================== FOR METER READING QUERIES, PHONE (011) 649 5864 –--------------------------------- SCALE 004 – RESIDENTIAL METER NBR. 2669994S – ESTIMATED CONSUMPTION FROM 16 JAN 2012 TO 20 FEB 2012 1610 kWh * 1508.73 BASIC WATER AND SEWAGE DISPOSAL ACCOUNT ========================================== ALL RELATED QUERIES: PHONE 080 13131013 WATER METER 3415376 READING 06JAN 06FEB 4680 4698 18kl * 86.74 300 1/Day*31 Days 9.3kls @ 0.00 = 0.00 > 300 /Day 8.7kls @ 9.97 = 86.74 ----------- ---------- Totals 18.0kls 86.74 WATER FIXED CHARGE 06JAN 06FEB * 92.70 DOMESTIC REFUSE REMOVAL - FEBRUARY * 60.67 MONTHLY RATES - FEBRUARY INSTALLMENT 476.17 VAT RAISED ON ITEMS ‘*’ 224.83 DIRECT DEBIT PAYMENT DUE ON 2012-03-15 2469.84 a) January has 31 days. How many free kilolitres of water did this family get in January? (1) b) If a household uses more than the free water grant in a month then they must pay a fixed cost for the water supply. What is the fixed water cost this family must pay? (1) c) What is the cost of the water per kilolitre charged by this municipality for the extra water used? (1) d) What was the total amount of water used by this family in January? (1) e) What was the cost of this water? (1) f) What was the total cost for the water used by this family? (1) g) Do businesses receive a water grant? (1) 29 Topic 3 Unit 4 Unit 4 Using goods and services efficiently and effectively The choices producers and consumers make will influence the efficient and effective use of goods and services. For example, producers need to decide: who to employ who to promote how many items to produce who to buy raw materials from when to replace machinery. As consumers we need to decide: what to eat for breakfast what clothes to wear each day whether to do our homework or go out and play football or netball. As consumers we have many choices. key words A business will try to make as much profit as possible, by getting the best price effectively – for the material that they need to make goods. They will also try to get the choosing the best best price for the goods they sell. Businesses must be aware that there is a lot option to get what you need at of competition for consumers’ money. If they do not buy their materials at the the best price at best price and keep wastage to a minimum or if they charge too much for the the right time efficiently – getting goods that they sell, the business could fail. the best results from what is To keep the business profitable, producers must be effective when they buy the available with goods and services they need or want. As a consumer, the business must compare the least possible waste in time and prices to make sure they get the most for their money. Businesses must efficiently materials use the goods or services they have paid for as consumers and producers. 30  Unit 4 Topic 3 To be effective and efficient, the business must decide on the best option to: buy material employ staff determine how much to produce determine the timing of production. As businesses are always competing for resources in production and market key words share in sales, the business’ profitability will depend on how successful these market share – the choices were. part of the market in which you sell Families can also be consumers or producers, so they can also benefit or suffer your goods and services hardship as a result of inefficient decision making and ineffective use of resources. People buy things that they think will give them the most benefit. Sometimes people choose things they see advertised without really checking if it is the best thing for them to buy and consume. Some families spend money on cigarettes and lotto tickets rather than buying fruit, vegetables and books. Activity 3.4 Investigate how you would spend pocket money if you had any Think about how you would spend your pocket money if you had any. Imagine that you receive R150 a month and then answer the questions. 1. How often do you get pocket money? Daily, weekly or monthly? 2. What do you buy with the money you have? 3. a) Do you use your money effectively and efficiently when you buy the items you want? b) Think about one of the things that you buy. Is there an alternative item that you can buy that will be a more effective and efficient way of spending your money? 4. After you have spent all your pocket money, do you wish you had bought something else? Explain your answer. 5. Did you save some of your birthday money? Explain your answer. 31 Topic 3 Unit 5 Unit 5 How to recycle and reuse goods to satisfy needs and wants It is important that businesses and consumers recycle and reuse goods. How to recycle and reuse We do not always need to spend our money buying new items to satisfy our needs and wants. We can recycle and reuse waste items, for example, plastic containers for milk or dishwashing liquid that are reused to manufacture rubbish bins and garden furniture. The new material made from the recycled plastic is called polywood. We often talk about the three Rs: reduce, reuse and recycle. This simply means that we are trying to be efficient and effective with the things we use. An example of a large landfill site. Many of the articles here could have been reused or recycled. Reuse – Efficient use of our goods means we can often reuse a product many times if we use it carefully. Clothes worn by an older child can be cared for so that younger brothers and sisters will be able to use those same clothes in future. Reduce – People can reduce how much of something they use. This will help to reduce waste and the cost of waste removal. It will also prolong the life of the landfill site and protect the environment. For example, taking a shower rather than a bath can save water, as well as electricity, as less hot water is used. Recycle – Throwing garbage into the bin is just one way of keeping our environment clean. We can do a lot more for our community if we sort our waste and recycle wherever possible. Items such as paper, glass and scrap metal can all be taken to recyclers who will pay you for this waste. 32  Unit 5 Topic 3 The recycling logo uses the three arrows for reduce, reuse and recycle as a reminder that we need to be more careful how we use things and how much we use. But there are many other words starting with ‘r’ that can help us save more and not throw so much away. Return – Buying goods in returnable containers means that we reduce the packaging costs for the product. The 1.5 l glass cool drink bottle is a good example of a returnable container. This makes the actual product being consumed cheaper. Re-engineer – Goods that could quite easily be repaired are often thrown away. For example, an old pair of denim jeans can be stitched, patched or even reused in a new way as shorts. They could also be converted into a sling bag for school. By using other people’s waste items, unemployed people can make a living for themselves and their families. Goods such as cars made from wire or suitcases made from old oil cans can be sold to tourists for an income. By re-engineering an old bicycle light dynamo a young entrepreneur made a cell phone charger that he uses while riding his bicycle. Activity 3.5 How you can reduce, reuse and recycle in your home 1. Think of three other verbs starting with ‘re’ that can help us reuse items at home. (3) 2. Use one of the new verbs you chose in 1 and explain how you can do this to save resources for your family, business or government agency. Use your imagination. (2) Did you know? Recycling one ton (1 000 kg) of paper will save: 15 trees from being chopped down – important for oxygen generation 2.5 barrels of oil – not having to transport the logs to the paper factory and the paper to the shops 4132 kWh of electricity – to power the production process to change the wood logs into pulp and then paper 2.26 m³ of landfill space after we have used the paper and thrown it away 142 188 l of water from the paper making and bleaching process 26.8 kg of air pollution from being emitted from the paper factory. Adapted from The Green Line, ISBN 978-0-7993-4955-9 33  Summary There are some things that households Unit 1 Goods and services cannot make for themselves and these Goods and services are both produced and things need to be bought when resources consumed by individuals, households, allow, for example, a motor car. companies and government agencies to satisfy their needs and wants. Unit 4 Using goods and services Goods are things we can touch and use like bread or a bicycle to satisfy a need or want. efficiently and effectively Services cannot be touched but can help Efficiency and effectiveness are key people, for example, a good education can managerial concepts. Whether managing a help a person get a good job. business, factory or household, we always have to choose what we will consume. As Unit 2 Producers and consumers consumer or producer these choices will Entrepreneurs and businesses grow when determine whether needs and wants are they know what people and businesses in successfully satisfied or not. the country/community need or want. They can then design a product or service Unit 5 How to recycle and reuse to satisfy that need. When this product goods to satisfy needs and is manufactured and sold the successful wants organisation is able to make a profit. This Needs and wants can be satisfied by reusing allows the business to grow. old goods in new ways. This also saves When manufacturing these goods and money by reducing consumption. services, the business becomes a consumer Recycling reduces waste that is usually of raw materials and services. dumped in a landfill site and will help preserve the natural environment. Unit 3 The role of households as There are also many other ‘re’ verbs that producers and consumers describe how we can be more efficient and Like any business or government agency, effective in the way we consume products the household can be both a producer of and services to satisfy our needs and wants. goods and services, as well as a consumer. To save money, members of a household will make things that can help satisfy their needs and wants. 34 Topic 4 Businesses Entrepreneurship Topic overview Differentiate between manufacturing, Und