Lecture 5 - the business environment (GDP,etc)
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LECTURE 5: UNDERSTANDING THE ENVIRONMENT OF BUSINESS (CHAPTER
A business is an organized effort. It makes, produces, provides or supplies things to
people who need them. They exist for consumers to get what they need and want (on
Factors of production: the raw materials and basic ingredients of any business.
Labour, capital, entrepreneurs, natural resources
Economic systems governments play a big role
Government plays a main or overwhelming role = command economy or planned
Market economy: govt plays small role, private individuals have power
Perfect competition: perfectly competitive market, a lot of similar companies
Monopoly: one company has monopoly over competitors, one provider
Monopoly game: the more property you own the more you get to charge and tax
Canada is a market economy, many businesses are starting everyday
Three forms of business: sole proprietor, partnership, corporation
Different countries have different approaches to ownership and distribution of factors of
Canadian economy vs. China, US, etc.
•Measures of economic performance/economics statistics
Gross domestic product (GDP), Productivity, Unemployment, Inflation
Purpose of an economic system if the government doesn’t take a major role,
individuals will take risks, the systems give us what we want
Measures of economic systems look at the economic system and what/how much its
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The economy is producing
•GDP the number that tells us all the products made/services offered and their value
within a country
Doesn’t tell us about the quality of the products/services, what they are (it’s just an
The larger the GDP, the more workers there are using more natural resources and
producing more within the country
Every country measures its GDP a measure of absolute size
US has the biggest economy, churns out the most ‘stuff’
Almost 15 billion: worth of the US economy
They have lots of oil, water, mines, forests, etc.
A lot of people working, a lot of resources
Doesn’t tell us the good or bad; just size, tells us about the economy
2nd China, 3rd Japan, 4th India. 5th Germany, 6th England, 7th France, 14th Canada
Has China surpassed US?
India is continuously rising
Growing of GDP: growth tells us whether the economy is healthy or not
Growth suggests more people working harder with better technology and more stuff
Falling of GDP: called the recession
Definition of recession: two consecutive quarters when the GDP is getting smaller (less
stuff being produced compared to previous months)
For a year and a half, the US economy got smaller
Double dip recession? Is it really recovering?
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