Week 1 lecture notes
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Business: an organization that produces or sells goods or services in an effort to make profits
Profit: money that remains (if any) after you subtract revenue – expenses
Economic system: the way in which a nation allocates its resources among citizens
Factors of production: resources used to produce goods – natural resources, labour, capital,
entrepreneurs and information resources.
Labour: mental and physical training and talents of people (sometimes called H. Resources)
Capital: the funds needed to operate an enterprise
- Revenue from sales of products is a key & ongoing source of capital once a business
- can come from individual entrepreneurs or shareholders
Entrepreneurs: an individual who organizes and manages the factors of prod. To produce
goods and services to earn a profit, but whom also run the risk of failure
Natural Resources: items used in the prod. of goods and services in their natural state,
including land, water, mineral deposits, trees etc.
Information Resources: information such as market forecasts, economic data, and
specialized knowledge of employees that is useful to a business and that helps it achieve its
Command Economy: an economic system in which government controls all or most factors
of production and makes all or most production decisions
Market economy: an economic system in which individuals control all or most factors of
production and make all or most production decisions – supply and demand based
Communism: a type of command economy in which governments own and operate
Socialism: a kind of command economy in which the Gov. owns and operates the main
industries, while individuals own and operate less crucial industries.
Market: a mechanism for exchange between buyers and sellers
Capitalism: a kind of market economy offering private ownership of the factors of
production and of profits from business activity.
Mixed market economy: an economic system with elements of both a command economy
and a market economy, in practice, typical of most nations
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