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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 1 Economics: The Study of how businesses, people make choices about o What things to produceconsume Business: an organization that provides goods or services, to customers, in order to make a profit. How best to produce things. How best to distribute wealth. MUST PROVIDE PROFIT Basic building blocks used to produce anything are called **Factors of production** 1. Labour Human beings, i.e workers 2. Natural resources Raw materials found in the ground, grown from earth, or harvested from nature Examples: Coal, wheat, water, wood 3. Capital Money or machines and technologies that money can buy Examples: Computers, phones, hammers, tractors, snow shovelling 4. Entrepreneurs The people who assemble and organise the other factors of production, the individuals who make it all happen 5. (Information resources) not in the four factors of procution Economic systems: How different countries answer basic economic questions: Who should own or control the factors of production? What should be produced, with the factors of production? Types of economies: (Command & Market) Command economies o Countries where: o The government ownscontrols most of the factors of production. o The government makes most economic decisions. Market economies Capitalist Economies: o Individuals ownscontrol all factors of production o Individuals make 100% of economic decisions o Examples: none Mixed Market Economies: www.notesolution.com o Individuals owncontrols majority of factors o Individuals make most of economic decisions o Governments regulate and tax, run some business o Example: Canada, USA, UK, France 4 Degrees of Competition: 1. Perfect Lots and lots of suppliers All are small More or less the same Must sell at the same price Example: carton of milk 2. Monopolistic Comp. Lots and lots of suppliers Most are small Most more or less the same Some are big, can differentiate themselves Most sell at the same price Big suppliers can charge extra Example: coffee shops vs. Starbucks 3. Oligopoly Small number of suppliers (4 or 5) All are large Each tries to differentiate itself Industry hard to enter, hard to exit They watch each other closely Example: Canadian banking industry 4. Monopoly Only one supplier (By definition) 100% market share Can set whatever price it likes Example: LCBO _____________________________________________________________________________________ Chapter 2 (Understanding the Environment of Business) GDP: Gross Domestic Product (GDP): $ value of all goods and services produced in a country in 1year Growing GDP: more people making more stuff. Falling GDP: fewer people making less stuff. Falling GDP: called recession GDPCapita = relative wealth (per capita means per person) www.notesolution.com
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