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Rotman Commerce (1,030)
RSM219H1 (86)


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University of Toronto St. George
Rotman Commerce
Chris Bovaird

CH1. The Concept Of Business and Profit -Business: an organization that seeks to earn profits by providing foods and services. -Profit: the money that remains (if any) after a business’s expenses are subtracted from its revenue -Expenses (costs): the money a business spends producing its goods and services and generally running the business. -Revenues(sales): the money a business earns selling its products and services. Expenses-Revenues= Profits Factors of production Labour Capital Entrepreneurs Natural recources Information Resources Types of Economic System 1. Command Economy: An economic system in which government contrals al or most factors of production and makes all or most production decisions. a) Communism: A type of command economy in which the government owns and operates all industries. b) Socialism: A kind of command economy in which the government owns and operates the main industries, while individuals own and operate less crucial indstries. 2. Market Economy a) capitalism: A kind of market economy offering private ownership of the factors of production and of profits from business activity. -Market: A mechanism for exchange between the buyers and sellers of a particular goods or services. -Mixted market economy: an economic system with elements of both a command economy and a market economy; in practice, typical of most nations’ economies. Privatization: the transfer of activities from the government to the public sector. -Deregulation: a reduction in the number of laws affecting business acitivity. Interactions between business and government Government as customer Government as competitor Government as regulation Government as taxation agent -Revenue taxes -Progressive revenue taxes -Regressive revenue taxes -Restrictive taxes Government as provider of incentives Government as provider of essential services The Canadian Market Economy Demand and supply in a market economy -The law of demand: buyers will purchase or demand more of a product as its price
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