The Concept Of Business and Profit
-Business: an organization that seeks to earn profits by providing foods and
-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.
Factors of production
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
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
-Progressive revenue taxes -Regressive revenue 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