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Notes

by

Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

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Chapter 1
Business- An organization that seeks to earn profits by providing goods and services
Profit- The money that remains after a business subtracts its assets by its expenses
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, capital,
entrepreneurs, and natural resources
Labour- the mental and physical training and talents of people; sometimes called human
resources
Capital- the funds needed to operate a enterprise
Factors of production
There are four main factors of production that help a business run: labour, capital,
entrepreneurs and natural resources.
Labour
Mental and physical work people carry out to certain work parts of a business
Capital
The financial resources needed to operate an enterprise, you need financial support to
start a business and to keep it up and running
Entrepreneurs
An individual who organizes and manages labour, capital, and natural resources to
produce goods and natural resources to produce goods and services to earn a profit, but
who also ruins the risk of failure.
Natural resources
Items used in the production of goods and services in their natural state, including land,
water, mineral deposits, and trees
Sometimes there is an extra one which is information resources
Information Resources
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Information such as market forecasts, economic data, and specialized knowledge of
employees that is useful to a business and that helps it achieve its goals
Types of Economic Systems
Command economy- An economic system in which government controls all or most
factors of production and makes all or most production decisions
Market economy- An economic system in which individuals control all or most factors of
production and make all or most production decisions
Communism- A type of command economy in which the government owns and operates
all industries
Socialism- A kind of command economy in which the government owns and operates the
main industries, while individuals own and operate less crucial industries
Market- A mechanism for exchange between the buyers and sellers of a particular good
or service
Capitalism- A kind of market economy offering private ownership of the factors of
production and of profits from business activity.
Mixed market economy- An economic system with elements of both a command
economy and a market economy; in practice, typical of most nations' economies
Privatization- The transfer of activities from the government to the public sector
Deregulation- A reduction in the number of laws affecting business activity
Interactions between business and government
Government as Customer
Government buys many goods and services's from companies along with the most
advertising nationally, both to help it run and to stimulate the economy
Government as Competitor
Governments also compete with other businesses through Crown corporations
Government as Regulator
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