Economics 2116A/B Lecture Notes - Canadian Business, Perfect Competition, Planned Economy
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Introduction to Management
Understanding the Canadian Business System
[To set the scene and provide some basic definition and define key features]
The number of factors of production is a theory. In general there are about 4: labour,
natural resources, capital, and entrepreneurs
The basic economic questions are
•Who should own or control the factors or production?
•What should be produced, with the available factors?
Different countries will have different ways to answer these questions. Things such as
natural resources available, production efficiency and population will affect the answer.
Countries with more people will be more involved in labour intensive productions.
Two types of Economic Systems
Command/Planned economy – government control/own factors of production and make
all the decisions. There are very few of total command economies such as North Korea.
Socialist economies – government owns/controls the majority of the factors of
production and makes most of economic decisions. Ex. Cuba.
Market/Capitalist economies – individuals own/control factors of production and make
all/most of the decisions. Ex. None. Governments would at least have some control
Mixed Market economies – individuals own controls majority of factors and make most
of economic decisions. Governments regulate and tax and run some businesses. Ex.
Canada, USA, UK.
In Canada, the majority of factors (businesses) are owned by individuals and decisions
about factors (what technologies to use, who to hire) are made by individuals. But
government does intervene and is involved in the economy through taxation. People
decided where to work and where to educate but government still taxes people. LCBO
owned by government.
Market – exchanges between buyers and sellers
Law of Supply – producers will offer more of a product as its price increases, less as its