A Business Defined, Economic Systems, Degrees of Competition

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19 Oct 2010
Chapter 1 t Understanding the Canadian Business System
- ξ€˜ξ€ž(]v]ξ‚š]}v}(^¡]vξ€žξ‚ξ‚_
o An organization that provides goods/services to customers in order to make a profit
o Not all organization are businesses t e.g. hospitals, universities, churches t these are services
- Profit and loss
o Profit: the difference between money in (revenue/sales) and money out (costs/expenses)
o Profit is the fundamental reason for a business to exist
o Loss: when expenses are greater than revenues
 When it costs more money to produce the products and run the business than the
business can generate through sales t e.g. Air Canada, GM
- Economics: the study of how businesses and people make choices about:
o What things to produce/consume
o How to produce things in the most efficient way
o How to best distribute wealth among employees/employers
- Basic Economics theory
o There are basic building blocks used to produce anything t ξ‚šZξ€žξ‚ξ€žξ€ƒξ€‚ξ‚Œξ€žξ€ƒξ€ξ€‚ooξ€žξ€šξ€ƒξ‚šZξ€žξ€ƒ^(ξ€‚ξ€ξ‚š}ξ‚Œξ‚ξ€ƒ}(
- Factors of production
1. Natural Resources
 Raw materials found in ground, grown from earth, or harvested from nature
 E.g. coal, wheat, water, wood
2. Labour
 A thriving workforce
 E.g. human beings (workers)
3. Capital
 Money/machines/technology that money can buy to further the development of a
 E.g. computers, phones, hammers, tractors
4. Entrepreneurs
 The people who assemble and organize the other factors of production t the individuals
who make it all happen
Chapter 1 t Understanding the Canadian Economy - Economic Systems
Economic Systems
- Who should own/control the factors of production?
- What should be produced, with what factors of production?
- Countries differ as to how central the government is in running an economy
o Communism t left wing (North Korea) (Government 100%)
o Socialism t moderate left wing (Cuba)
o Mixed t moderate right wing (Canada)
o Capitalism t right wing (None) (Individuals 100%)
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