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Final

MGTA01H3 Study Guide - Final Guide: Comparative Advantage, Chief Executive Officer, Canadian Human Rights Act


Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird
Study Guide
Final

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Business: an organization that seeks to earn profits by providing goods + services
Profit: money that remains after a business’s expenses are subtracted from its
revenue
Expenses: money that a business spends producing goods/services and running the
business (costs)
Revenue: money a business earns selling products/services (sales)
Economic system: the way in which a nation allocates its resources among its
citizens
Factors of Production: the resources used to produce goods and services
-labour
-land
-capital
-entrepreneur
Labour: the mental and physical training and talents of people (human resources)
Capital: the funds needed to operate an enterprise
Entrepreneur: an individual who organizes and manages labour, capital, and natural
resources to produce goods and services to earn a profit
Natural Resources: items used in the production of G/S in their natural state
including land, water, mineral deposits and trees
Command Economy: government controls all or most factors of production and
makes all decisions
Market Economy: individuals control factors and production decisions
Communism: a type of “COMMAND” economy in which government own and
operates all industries
Socialism: a type of “COMMAND” economy in which main industries are owned by
government and less crucial industries by individuals
Market: a mechanism for exchange between buyers and sellers of a particular G/S
Capitalism: a type of “MARKET” economy offering private ownership of factors of
production and profits from business activity
Mixed-Marked Economy: elements of both command and market economy,
practiced by many nations
Privatization: transfer of government activities to public sector

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Deregulation: a reduction in the number of laws affecting business activity
Government: customer, competitor, regulator, taxation agent, and provider of
incentives & essential services.
Revenue Taxes: main purpose is to fund government services/programs
Progressive Taxes: levied at higher rate on higher income taxpayers and lower rate
on lower-income taxpayers
Regressive revenue taxes: taxes that cause poorer people to pay a higher
percentage of income than richer people pay
Restrictive Taxes: taxes (i.e alcohol, tobacco, gasoline) levied to control certain
activities legislators believe should be controlled.
Demand: willingness/ability of buyers to purchase a product/service
Supply: willingness/ability of producers to offer a G/S for sale
Law of Demand: buyers will purchase (demand) more of a product as its price drops
and less of a product as its price increases
Law of Supply: Producers will offer (supply) more of a product for sale as its prices
rises
Demand and Supply Schedule: assessment of the relationships between different
levels of demand and supply at different price levels
Demand curve: graph show how many units will be demanded
Supply curve: graph showing how many units will be supplied
Market Price/Equilibrium Price: Profit-maximizing price at which the quantity of
goods demand and quantity if goods supplied are equal.
Surplus: quantity supplied exceeds quantity demanded
Shortage: quantity demanded exceeds quantity supplied
Private Enterprise: economic system characterized by private property rights,
freedom of choice, profits, and competition.
Competition: the vying among businesses in a particular marker or industry to best
satisfy consumer demand and earn profits
Degrees of Competition
Perfect Competition: a market or industry characterized by a very large number of
small firms producing an identical item so that none of the firms has ability to
influence price
Monopolistic Competition: large number of firms supplying products that are similar
but distinct enough from one another to give firms some ability to influence price

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Oligopoly: small number of very large firms that have the power to influence the
price of their product
Monopoly: one producer who can set the price of its product/service
Natural Monopoly: having only one producer is more efficient since it can meet all of
consumers demand of a particular product (i.e. electric company, postal service)
External Environment: everything outside a companies’ boundary that might affect
it (i.e. political, economic, technological, global, business, socio-cultural
environments and emerging challenges and opportunities
Economic Environment: conditions of an economic system in which an organization
operates
Business cycle: pattern of short-term ups/downs (expansions and contractions) in an
economy
Recession: period during which Aggregate output (measures by GDP) declines
Depression: sever and long-lasting recession
Aggregate output: total quantity of goods and services produced by an economic
system during a given period
Standard of Living: total quantity and quality of goods/services that countries citizen
can purchase with the currency used in their economic system
GDP-Gross Domestic Product: total value of all goods and services produces within a
given period by a national economy through domestic factors of production
GNP-Gross National Product: total value of all goods and services produced by a
national economy within a given period regardless of where the factors of
production are located (international activity)
nominal GDP: GDP measured in current dollars or with all components valued at
current price
real GDP: GDP calculated to account for changes in currency value and price
changes
purchasing power parity: principle that exchange rates are set so that the prices of
similar products in different countries are about the same
Productivity: measure of economic growth that compares how much a system
produces with the resources needed to produce.
Main threats to economic stability: inflation and unemployment
Key goals of Canadian economy: 1) economic growth 2) economic stability 3) full
employment
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