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York University
Administrative Studies
ADMS 1000
Len Karakowsky

SESSION 2 ECONOMIC CONTEXT Reading: Karakowsky text, Ch.2 Learning Objectives: By the end of the chapter, you should be able to: 1. Identify the factors of production. 2. Describe different types of global economic systems according to the means by which they control the factors of production through input and output markets. 3. Show how demand and supply affect resource distribution in Canada. 4. Identify the elements of private enterprise and explain the various degrees of competition in the Canadian economic system. 5. Define key indicators of economic stability and economic growth. Opportunities and Challenges in the Mobile Phone Market What is the economic environment of business? The Idea of Business & Profit What is: Business Profit Non-profit Factors of Production Businesses make economic choices based on their needs for the five factors of production 1. Natural resources - land and raw materials 2. Labour - workers 3. Capital - buildings, machinery, tools and equipment 4. Information resources - knowledge workers with specialized education, skills and experience 5. Entrepreneurs - individuals who start up businesses How does Tim Horton’s utilize the five factors of production? Factors of Examples at Tim Horton’s How used? Production: Natural resources Land to operate business Coffee beans to make coffee Sugar to make donuts Milk to make other products Labour Workers in franchise store manager, cashier, coffee maker, Workers at corporate head donut maker, cleaner office executives, marketing managers, finance managers, other administrative staff Capital Buildings to run the fast food restaurant franchises Machines cooking equipment: to cook donuts, make Tools coffee, etc computers and calculators: to keep track of revenues and expenses Knowledge Specialized skills individuals who understand the complexities of the coffee-bean trade, growing coffee etc Entrepreneur Franchise Owner Tim Horton is the original founder, but you can own and operate a franchise Economic Systems What is an economic system? Types of Economic Systems: 1) Command/communism 2) Socialism 3) Market economy • Input and output markets 4) Mixed economy Communism Communism exists when the government owns all the country’s resources and makes economic decisions centrally. Socialism Socialism is an economic system whereby the government has large ownership or control of its major industries essential to the country’s economy. Market Economy Private enterprise typically has four elements: • Private property • Freedom of choice • Profits • Competition Mixed Economy  An economy that uses more than one economic system.  Eg. Canada The Laws of Supply and Demand Demand • is the result of the decisions from buyers on whether or not to purchase a good or service. Supply • is the result of the decisions of sellers whether to produce and offer a good or service for sale. The Laws of Supply and Demand • states that more of a good will be demanded (by society) as the price drops, and more of a good will be supplied (by producers) as the price rises. Competition and the economy Types of
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