MGTA01H3 Study Guide - Walmart, Money Supply, Liquor Control Board Of Ontario

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MGTA03Christ Bovaird, MW-232
September 15, 2009
In class test12.5%
Mid term exam37.5%
Final Exam50%
business: an organization that provides goods or services to customers in order to
make a profit
obuys things, use things to supply things to people who needs it or wants it
ocan be successful when business satisfy consumer needs and wants
oprovides goods and services and employ working people, create new
innovations and provide opportunities for other businesses (suppliers)
ocontribute to quality of life and standard of living, keep industries growing
Profit: difference between $$ in and $$ out (revenue or sale cost or expenses)
oFundamental reason for a business to exist (not all organizations are
businesses: hospitals, universities, churches, provide services but not for
Loss: expense > revenuecosts more to produce or run the business than sales
oAir Canada: competition, recession, too many people working but too little
people flying
oGeneral Motors, Chrysler: no ones buying new cars,
Economics: The study of how businesses, people make decisions
owhat to produce/consume
ohow best to produce things
ohow best to distribute wealth (spend)
Factors of production: basic building blocks used to produce anything
oNatural resources: raw material in or grown from ground (ex. Coal, water,
wood, cotton)
oLabour: human beings, mental and physical capabilities of people
oCapital: money or machines and technologies that money can buy (ex.
computers, phones, tractors, hammers, welding machines, investments)
oEntrepreneurs: people who assemble and organise the other factors, to make
it happen
Accept the opportunities and risk in creating business
oInformation: specialized expertise and knowledge of people, economic data
Businesses create new information or repackage existing information
too (AOL)
September 22, 2009
5th factor of production (maybe): information, but information does not do anything
unless you have human to interpret, analyse the information
Economic systems: the way countries try to answer basic economic questions
oWho should own or control the factors of production?
oWhat to produce with the available factors?
o How best to share it?
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MGTA03Christ Bovaird, MW-232
Command or planned economies: the govt owns most factors of production and
makes most decisions regarding economic
oCommunist economies: govt owns/controls almost all of the factors of
production, makes almost 100% of the economic decisions (ex. North Korea)
oSocialist economies: govt owns/controls the majority of factors production
(principal industries), makes most of the economic decisions (ex. Cuba)
People choose their jobs but large portion works for govt
Govt operated enterprises are inefficient because mgmt is based
Welfare system result in high taxes
Market economies: individuals own most of the factors of production and makes most
of the decisions regarding the 2 key economic questions
oCapitalist economy: all factors of production owned by private individuals,
state plays no role in making economic decisions (no example)
oMixed economy: private individuals own/control majority of the factors of
production and makes most of the economic decisions (Canada, USA, France,
Germany, Japan)
Privatizationprocess of converting govt enterprises into privately owned
oTNT post group, Canadian air traffic control system, reduced payroll and
boosted efficiency & productivitybecame more profitable
Deregulationreduction in # of laws affecting business activity and in the power of
govt enforcement agencies (let companies do what they want)
Canada: farmland, forests, mines owned by private individuals
oDecisions about labour, technology, made by private sector
oGovt does intervene and is involved in the economy
oEx. Wal-mart (owned by Walton Family) beside LCBO (owned by Ontario
Market is not a place, it is a bunch of activities, where buyers and sellers exchange
Prices and volume of transactions are set by buyers (pay as little as possible) and
buyers (get as much as possible)
Market prices set by buyers and sellers making thousands transactions every minute
Law of supply: producers offer more as price increase, less as it drops
Law of demand: consumers purchase more of a product as price drops, less as it rises
Demand and supply schedule: assessment of the relationships b/t levels of D&S
Equilibrium/ market price: price at which QD intersects QS
Surplus: QS > QD—business lose money
Shortage: QD > QS—business make less than what they couldve made
Private enterprise:
oprivate property rights: own resources
ofreedom of choice: sell labour to anyone, choose products, etc
oprofits: influence individual choices
ocompetition: motivates business efficiency
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MGTA03Christ Bovaird, MW-232
Degrees of competition: ability of buyers & sellers to negotiate good prices, or have
leverage over one another depends on # of buyers and sellers in the market
oPerfect competition: lots of small suppliers, more or less the same at same
price (milk)
oMonopolistic competition: lots of suppliers, mostly small, mostly same, some
big and differentiated, most sell at the same price, big suppliers charge extra
(coffee shops)
oOligopoly: small # of suppliers, all large, each tries to differentiate, industry
hard to enter or exit, suppliers watch and follow each other (banking)
oMonopoly: only one supplier, 100% market share, set whatever price it likes
Natural monopoly: having one producer = most efficient as it meets all
Govt as customer: buys G&S from business (supplies, buildings, equipment,
Govt as competitor: competes with business through crown corporations
Govt as regulator: issue licence, regular prices,
oProtect competition: eliminate restrictive trades and stimulate maximum
production, distribution & employment (prevent large businesses wiping out
small firms)
oProtect consumers: hazardous products act, tobacco act, food and drug act
oSocial goals: access to health care, safe workplaces, employment insurance,
oProtect environment: Canada water act, fisheries act, environmental
contaminant act
Govt as taxation agent: revenue taxes (to fund various services and programs
oProgressive revenue taxes: high rate on high income people, low rate on low
oRegressive revenue taxes: poor people pay higher % of income than richer
oRestrictive taxes: to control certain activities that should be controlled
Govt as provider of incentives: stimulate economic development
oEx. Stats Can, export development corp., resources Canada, tax rebates
Govt as provider of essential services: education, hospitals, highways, postal service,
September 29, 2009
Purpose of an economic system: to assemble, organize resource to make things that
people want so they buy them, and create profits for suppliers—everyone better off
Measuring economic performances: is the system producing
oLots of things that people want?
oMore things every year?
oQuickly and efficiently?
oAt reasonable prices?
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