Lesson Notes By Weeks and Term v5 - Grade 7

Lesson Video

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Performance objectives

• Define needs, wants, goods, and services.
• Explain the four factors of production.
• Describe scarcity, choice, and opportunity cost.
• Distinguish between formal and informal sectors.
• Explain the importance of savings and budgets.

Lesson summary

This week, we are revisiting and consolidating key concepts learned throughout Grade 7 EMS. This is crucial because a solid understanding of these foundational ideas will set you up for success in Grade 8 and beyond. EMS is about understanding how our economy works, how businesses operate, and how we can all make informed financial decisions.

Think about it: from buying sweets at the spaza shop to your parents managing the household budget, EMS is all around us. In South Africa, understanding these principles is particularly important so that we can all contribute to building a stronger and fairer economy.

Lesson notes

2.1 Needs vs. Wants, Goods vs.

Services Needs: These are things essential for survival. Examples include food, water, shelter, and clothing. Without these, we cannot live a healthy and productive life.

Wants: These are things we desire but are not essential for survival. They improve our comfort and enjoyment of life. Examples include the latest cell phone, designer clothes, or going to the movies.

Goods: These are tangible items that we can see, touch, and use. Examples include bread, a school bag, a bicycle, or a television.

Services: These are intangible activities performed by someone for another person. Examples include a doctor's consultation, a haircut, transportation by a taxi, or education provided by a teacher.

Example: In a rural village, a family needs access to clean water (a good), while the father wants a new bakkie (a good). The local nurse provides healthcare services, and the community store sells essential goods. 2.2 Factors of Production These are the resources used to produce goods and services: Natural Resources: These are raw materials that come from nature. Examples include land, minerals (gold, diamonds), water, forests, and oil. South Africa is rich in natural resources.

Labour: This refers to the human effort, both physical and mental, used in production. Examples include a farmer planting crops, a teacher teaching students, or a factory worker assembling cars.

Capital: These are man-made goods used to produce other goods and services. Examples include machinery, tools, equipment, and buildings. A tractor used on a farm is capital.

Entrepreneurship: This is the skill of combining the other factors of production to create goods and services, taking risks, and organizing a business. Entrepreneurs are innovators and problem-solvers. Think of someone starting a small spaza shop or a tech company.

Example: Consider a bakery making bread. Natural resources include wheat, water, and sugar. Labour includes the baker mixing the ingredients and operating the oven. Capital includes the oven, mixing bowl, and delivery van. The entrepreneur is the owner who started the bakery, manages it, and takes the risk of running the business. 2.3 Scarcity, Choice, and Opportunity Cost Scarcity: This is the basic economic problem – we have unlimited wants but limited resources to satisfy them. This means we cannot have everything we want.

Choice: Because of scarcity, we must make choices about which wants to satisfy.

Opportunity Cost: This is the value of the next best alternative that we give up when we make a choice. It’s what you lose by choosing something else.

Example: A learner has R

5

0. They can either buy a movie ticket or a new book. If they choose the movie ticket, the opportunity cost is the enjoyment and knowledge they would have gained from reading the book. 2.4 Formal vs.

Informal Sectors Formal Sector: This consists of businesses that are registered with the government, pay taxes, and follow labour laws. Employees have contracts and benefits like medical aid and pension funds. Examples include large corporations, banks, schools, and government departments.

Informal Sector: This consists of businesses that are not registered with the government, do not pay taxes, and often operate outside of labour laws. Examples include street vendors, informal taxi services (like "amaphela"), and small home-based businesses. The informal sector provides income for many people in South Africa.

Example: A large clothing factory is part of the formal sector. A hawker selling fruit and vegetables on the side of the road is part of the informal sector. 2.5 Savings and Budgets Savings: This is the portion of income that is not spent but set aside for future use. Saving money helps you achieve your financial goals, like buying a car, paying for education, or having money for emergencies.

Budget: This is a plan for managing income and expenses over a specific period (e.g., a month). It helps you track where your money is going and ensures that you are not spending more than you earn.

Example: A learner earns R100 per month from doing chores.

They create a budget: R50 for snacks, R30 for transport, and R20 for savings. This budget helps them manage their money effectively. Guided Practice (With Solutions)

Question 1: Thando has R

2

0. She wants to buy a chocolate bar for R15 and a packet of chips for R

1

0. Explain the concept of scarcity, choice and opportunity cost in this scenario.

Solution: Scarcity: Thando's limited resource is her R

2

0. She wants to buy items that cost a total of R25 (R15 + R10), but she doesn't have enough money. This illustrates scarcity.

Choice: Thando must choose which item(s) to buy. She cannot afford both. She may choose to buy only the chocolate bar or only the chips, or perhaps something else entirely that costs less than R

2

0. Opportunity Cost: If Thando chooses to buy the chocolate bar, the opportunity cost is the satisfaction she would have received from eating the packet of chips.