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Midterm

COMMERCE 1B03 Study Guide - Midterm Guide: Gross Domestic Product, Export Development Canada, Foreign Direct Investment


Department
Commerce
Course Code
COMMERCE 1B03
Professor
Rita Cossa
Study Guide
Midterm

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MIDTERM #1
COMMERCE 1B03
CHAPTER 1—5 AND THE LEGAL ENVIRONMENT PODCAST
CHAPTER 1
Objectives of Business
used in for-profit, non-profit, and government
2 Markets
1) Consumer Market — bought for personal use
2) Business Market — used for the business
A business can sell to both markets
Stakeholders
All the people who stand to gain or lose by the policies and activities of
business
“Want” to make changes
Creating Economic Wealth
Making countries rich = a combination of entrepreneurship and knowledge
The Business Environment
Consists of uncontrollable, surrounding factors that help develop the business
Quality of Life = foundation is right business environment
CHAPTER 2
Economics
“Economics” is the study of how society chooses to employ resources (5
factors of production) to make items for use
2 Major Branches: 1) Macroeconomics
2) Microeconomics
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MIDTERM #1
COMMERCE 1B03
Different Economic Systems
Capitalism — individuals wanting profits, selling to a free market to those who
can pay
Communism — government controls what will be made & who uses production
Socialism — some free market and some government allocation
Free-Market Competition Types
Number of Sellers, Product Differences, Importance of Marketing Mix (4 P’s)
Pure/Perfect Competition — many buyers and sellers for similar product,
distribution is important
Monopolistic Competition — large number of sellers for unique (substitutional)
products, pricing is important
Oligopoly — few large sellers/competitors, sellers have large control over price,
promotion is important
Monopoly — 1 seller, price is based on demand, products are not substitution,
marketing mix is unimportant
MACROECONOMICS CONDITIONS
Business Cycles
1) Economic Boom
2) Recession
3) Depression
4) Recovery
Gross Domestic Product (GDP)
total value of goods/services made in a country in a period of time
GDP indirectly reflects:
Level of Employment
Productivity
Efficiency
Unemployment
Frictional — people who quit and have not found a job
Structural — company restructuring, mismatch jobs & employees
Cyclical — due to downturn in the economy
Seasonal — demand for labour varies
Productivity
measured on a national scale in terms of GDP
Decrease in GDP = unemployment
Increase in Productivity = more competitive, prices lowered
Improving Productivity
promote investment in machinery/equipment
invest in education and skills of people
open the economy to trade and investment
Price Indexes
Consumer Price Index (CPI) — consumer purchases
Industrial Product Price Index (IPPI) — business to business
Raw Material Price Index (RMPI) — reflect raw material price into product price
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find more resources at oneclass.com
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