BUSI 1800 Chapter Notes -Single Market, Perfect Competition, Price Controls
6 Mar 2014
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The motive of business is to generate a profit. Goods & services: capital, labour, natural resources, entrepreneurs, information. Communist model: govt owns all the factors of production and makes all the decisions regarding distribution of resources, gov t owns all industries including essential services. Socialist model: govt owns and operates all critical components of the country, individuals own non-critical businesses. Market economy model: economic basis is s&d, political basis is capitalism, ownership is open to all, buyers and sellers have freedom of choice, the market is the mechanism for the exchange of goods and services. Input market firms buy resources from households: 2. Output market households buy products and services from the firms: 3. Mixed market economies have both privatization and deregulation of certain sectors. Government as a tax agent (revenue, income, restrictive, duty) Perfect competition: very easy to exit and enter the market, profit maximization, perfect information, homogeneous products.
