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Lecture 3

MGTA01H3 Lecture Notes - Lecture 3: Planned Economy, Economic System, Canada Labour Code

Course Code
Bill Mc Conkey

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Chapter 3: Economic Systems: Who Owns and Controls rhe Factors of Production:
Economics: The study of how people produce the things they need and want
- Canadians have come to accept that goods and services are produced and make available
to use from a mix of for-profit and not-for-profit organisations
Economic system: The means by which a society produces and distributes the goods and services
that its people need
- An economic system determines who owns the factors of production
- Who controls the factors of production
- Who decides what needs to be produced
- Who decides how goods and services are distributed
Planned Economy: An economic system where the government takes the lead role in owning and
controlling the factors of production. In a planned economy, the decisions about what gets
produced and how it gets produced are determined by a government plan
- This is based on the assumption that the nation’s smartest and best educated economists,
financiers, engineers, managers, planners and forecasters can be retained to work for the
- The weakness of this economy it that despite the state’s power and desire to do good it
cannot ensure that its plan will produce precisely correct quantities of every conceivable
good and service
Communism: An economic system where all the factors of productions are controlled by the
state, and where there is no private property (only example would be North Korea?)
Socialism: An economic system where the government owns or controls the majority of the
factors of production and directs the majority of productive activity (ex. Cuba)
Market Economy: A country with an economic system in which individuals make the decisions
about what gets produced
- An advantage is that individual business owners and store and factory owners are closer
to the customers than the government. These individuals get to latest information about
their customers wants and needs
- A disadvantage is that even private businesses can get large, bureaucratic and
Pure Capitalism: An economic system in which all of the factors of productions are owned by
private individuals. All economic activity is privately run, citizens pay no taxes, and the
government imposes no regulations on business
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