Term Test 1 Study Guide

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Rotman Commerce
Michael Szlachta

I. Understanding the Canadian Business System Business a organization that seeks to earn profits by proving goods and services Capital the funds needed to operate an enterprise Capitalism an economic system in which markets decide what, when & for whom to produce Command economy an economic system in which govt controls all or most factors of production & makes all most production decisions Communism a type of command economy in which govt owns & operates all industries Demand the willingness & ability of buyers to purchase a productservice Deregulation a reduction in the # of laws affecting biz activity & in power of govt enforcement agencies Economic system the way in which a nation allocates its resources among its citizens Entrepreneur an individual who organizes & manages labour, capital & natural resources to produce g&s to earn a profit but also runs the risk of failure Factors of production the resources used to produce goods & services: labour, capital, entrepreneurs, natural resources Input market firms buy resources that they need in the production of g&s Labour (or human resources) the mental & physical training & talents of people Lobbyist a person hired by a company or an industry to represent its interests to govt officials Market a mechanism for exchange between the buyers & sellers of a particular good or service Market economy an economic system in which individuals control all most factors of production & makes all most production decisions Mixed market economy an economic system with elements of both a command & market economy; in practice, typical of most nations economies Nationalization the conversion of private firms into govt-owned firms Output market firms supply g&s in response to demand of consumers Privatization the transfer of activities from the govt to the private sector Profit what remains (if anything) after a businesss expenses have been subtracted from its revenues Socialism a kind of command economy in which govt owns & operates main industries while individuals less crucial industries Supply the willingness & ability of producers to offer a good or service for sale Trade association an organization dedicated to promoting the interests & assisting the members of a particular industry Federal Regulatory Agencies Canadian Radio-Television and Telecommunications Commission (CRTC) issues & renews broadcast licenses Canadian Transport Commission (CTC) makes decisions about route & rate applications for 1 www.notesolution.comcommercial air & railway companies Canadian Wheat Board regulates price of wheat Canada Water Act controls water quality in fresh & marine waters Environmental Contaminants Act establishes regulations for airborne substances that are a danger to human health or the environment Fisheries Act controls the discharge of any harmful substance into water Food and Drug Act prohibits the sale of food that contains any poisonous or harmful substances Hazardous Products Act requires poisonous, flammable, explosive, or corrosive products to be appropriately labelled Textile Labelling Act regulates the labelling, sale, importation, & advertising of consumer textile articles Tobacco Act prohibits cigarette advertising on billboards & in stores Weights & Measures Act sets standards of accuracy for weighing & measuring devices Progressive revenue taxes taxes levied @higher rate on higher-income taxpayers & @lower rate on lower-income taxpayers Regressive revenue taxes taxes that cause poorer ppl to pay a higher % of income than richer ppl pay Restrictive taxes taxes levied to control certain activities that legislators believe should be controlled Revenue taxes taxes whose main purpose is to fund govt services & programs Competition the vying among businesses in a particular market or industry to best satisfy consumer demands & earn profits Demand curve graph showing how many units of a product will be demanded (bought) @diff. prices Demand & supply schedule assessment of the relationships among different levels of demand & supply @different price levels Factory system process in which all the machinery, materials & workers required to produce a good in large quantities are brought together in one place th Industrial Revolution a major change in goods production that began in England in mid-18 century & was characterized by a shift to factory system, mass production & specialization of labour Law of demand the principle that buyers will purchase [demand] more of a product as its price drops Law of supply principle that producers will offer [supply] more of a product as its price rises Market price [equilibrium price] profit-maximizing price @which quantity of goods demanded = quantity of goods supplied 2 www.notesolution.com
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