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ADMS 1000 (546)
Lecture

Session 2.doc

3 Pages
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Department
Administrative Studies
Course Code
ADMS 1000
Professor
Peter Tsasis

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Chapter 2 Case: 41- 42 The Economic Context -Business: an organization that produces sells goods/services in an effort to make profit -Profit: remainder after business expenses are subtracted from its revenues -Not for Profit Organization: use funds to provide services to the public -Factors of Production: basic resources that a country’s businesses use to produce goods and services. 1.Labour: mental and physical capabilities of people 2.Capital: the funds needed to start/operate a business 3.Land: all physical resources such as land water etc. 4.Entrepenuership: people who accept the risks/opportunities 5.Information Resources (Knowledge): specialized knowledge/expertise of people Economic Systems: 1.Command: Economic system owned by a government that controls all or most factors of production -Communism (German economist Karl Marx): a system in which the government owns and operates all sources of production -Socialism: Government owns and operates only selected major i industries, this is very inefficient since management positions are filled on political consideration rather than ability and this requires high taxation 2.Market: Individuals, producers, and consumers control and provide through supply & demand -Capitalism: private ownership of the factors of production and encourages entrepreneurship by profit 3.Mixed Market: characteristics of both command and market economies -Privatization: converting government enterprises to privately owned ones -Nationalization: converting private firms into government owned firms -Canada is a mixed economy of as well both market and socialism -Market: a place of exchange between buyers and sellers -Demand: the willingness and ability to purchase a product or service -Supply: willingness and ability to produce a good or service -Private enterprise system: a system that allows individuals to pursue their own interests with minimal government restriction including four elements: Chapter 2 Case: 41- 42 1.Private Property: Ownership of the resources used to create wealth is in the hand of the individuals. 2.Freedom of Choice: hire/sell/choose/work is your choice 3.Profits: Influence choices of what to produce 4. Competition: profits motivate individuals; to gain advantage a business must produce goods more efficiently to sell at a reasonable profit. Competition forces businesses to make products better and cheaper D
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