Lesson Notes By Weeks and Term v5 - Grade 9

Lesson Video

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Performance objectives

• Define key business terms with South African examples.
• Analyze the difference between wants and needs for financial planning.
• Calculate profit, loss, and simple interest.
• Explain the role of different economic systems.
• Differentiate between legal and illegal business practices.

Lesson summary

This week is dedicated to revising and preparing for your Economic and Management Sciences (EMS) exam. We will consolidate your understanding of key concepts covered throughout the term, focusing on practical application and exam technique. This is crucial because EMS equips you with the skills to understand the economic landscape of South Africa, manage your own finances, and potentially become successful entrepreneurs contributing to our country's growth. Being prepared for your EMS exams not only affects your academic performance but also your future prospects in a world increasingly shaped by economic forces.

Lesson notes

Let's dive into the core concepts that you need to master.

A. Basic Business Concepts: Needs vs.

Wants: A need is something essential for survival (food, water, shelter). A want is something desirable but not essential (latest cellphone, designer clothes). In South Africa, many people struggle with meeting their basic needs, highlighting the importance of understanding resource allocation. Goods vs.

Services: Goods are tangible items (e.g., a loaf of bread, a school uniform). Services are intangible activities that satisfy a need or want (e.g., a haircut, medical consultation, transportation by taxi).

Income: Money received, often from wages, salaries, or investments. Think of a parent working at a local supermarket and earning a salary.

Expenses: Money spent on goods or services. For instance, buying groceries, paying for transport, or contributing to household bills.

Profit: The money a business makes after deducting expenses from income. Profit = Income - Expenses.

Example: A spaza shop earns R5000 in a week but spends R3000 on stock and operating costs. The profit is R5000 - R3000 = R

2

0

0

0. Loss: Occurs when expenses exceed income. Loss = Expenses - Income.

Example: If the same spaza shop earned R3000 but spent R5000, they would have a loss of R

2

0

0

0. Assets: What a business owns (e.g., cash, equipment, buildings, inventory).

Example: A hair salon's assets might include hairdryers, chairs, and the building it operates from.

Liabilities: What a business owes to others (e.g., loans, accounts payable).

Example: The same hair salon might have a loan from a bank to purchase equipment.

Capital: The money invested to start or run a business. This could come from the owner's savings, a loan, or investors.

B. Financial Literacy and Planning: Understanding your income and expenses is vital for effective financial planning. Create a budget to track where your money goes. Identify unnecessary wants that can be reduced to save money. In South Africa, saving is particularly important due to economic uncertainties.

Worked example

Nomusa earns R500 pocket money per month.

Her expenses are: R100 for airtime, R200 for snacks, and R50 for transport.

Calculate total expenses: R100 + R200 + R50 = R350

Calculate savings: R500 - R350 = R150

Nomusa saves R150 per month. She could consider reducing her snack expenses to save even more.

C. Economic Systems:

Free Market Economy: Prices are determined by supply and demand, with minimal government intervention. Competition is encouraged.

Examples: The informal sector in South Africa, such as street vendors, often operates within a free market framework.

Command Economy: The government controls resources and makes production decisions.

Mixed Economy: A combination of free market and command economy principles. Most countries, including South Africa, operate as mixed economies. The government regulates certain industries, provides social services, and promotes economic stability.

D. Business Ethics and Legality:

Legal Business Practices: Following all laws and regulations.

Examples: Registering your business with SARS (South African Revenue Service), paying taxes, complying with labour laws.

Illegal Business Practices: Activities that violate the law.

Examples: Tax evasion, selling counterfeit goods, exploiting workers, bribery. These practices harm the economy and society.

Importance of Ethics: Businesses should operate ethically by being honest, fair, and responsible. This builds trust with customers, employees, and the community.