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Department
Administrative Studies
Course
ADMS 1000
Professor
Len Karakowsky
Semester
Fall

Description
2) Communism/Command Economy - Communism exists when the government owns all the country’s resources and makes economic decisions centrally. - individuals contribute according to their abilities and receive economic benefits according to their needs. 3) Socialism an economic system whereby the government has large ownership or control of its major industries essential to the country’s economy. 4) Mixed Market Economy An economy that combines features of more than one economic system e.g., an economy where government owns certain industries but others are owned by the private sector. Canada (market economy and Socialist) Private Enterprise and Competition Elements of private enterprise (pg 33) Perfect (or Pure) competition large number of buyers & sellers acting independently product or service is undifferentiated the market determines the price low barriers to entry Agriculture example of Canadian pure competition Monopoly when there is only one producer in a given market no substitute products exist the company is able to determine the selling price significant barriers to entry example in Canada: utilities Oligopoly when only a few competitors dominate an industry competition is fierce b/c the action in one firm significantly effect profits of other avoid price competition b/c profit lost, emphasis on advertising high barriers to entry, large capital investment is necessary eg. Rubber Monopolistic a large number of companies compete with each other big or small products and services are differentiated at least in a small way (brand, design, adds) market sets the price Easy to enter or leave Economic forces that influence businesses 1) the business cycle : (expansionary) Peak Contraction: -Recession (contractionary) – two consecutive quarters when economy shrinks -Depression – occurs when trough of the business cycle is 2 or more years Trough Recovery 2) GDP and GNP Gross domestic product- total value of goods and services produced within a given period by a national economy through domestic factors of production. If GDP is going up that means there is economic growth. Real GDP- GDP has been adjusted Nominal GDP- GDP that is not adjusted and is measured in current dollars. Gross national Product- total value of all goods and services produced by a national economy within a given period regardless of where factors of production are located. 3) Productivity “A measure of economic growth that compares how much a system produces with the resources needed to produce it.” - if more products are being produced with fewer factors of production then the price goes down. As a consumer you need less of your currency to purchase the product and you standard of living has improved. Economic productivity increase = improved SOL 4) The Balance of Trade the economic value of all the products a country exports minus the economic value of imports Trade surplus- positive value exports greater than imports trade defecit- negative imports greater than exports Canada usually has positive balance it is creditor nation not debitor National Debt amount of money that the government owes its creditors. Can be local, regional, national Government makes revenue and and has xpense. For many years Canada has Budget defecit- borrowed /spent more money then it has taken in. a recession causes 86% increase in debt 5) Inflation Happens when the amount of money injected into the economic system is more then actual output. people have more money to spend but there is the same quantity of good available to buy. Competition to buy available goods cause prices to rise. Before long high prices will erase the money injected into the economy. Purchasing power therefore declines. Measuring Inflation consumer price index (CPI) inflation rate= Deflation is when the amount of money injected into economic system lags behind increases in actual output. Prices may also fall because industrial productivity is increasing and cost saving are being passed on to consumer (good) or conumers have high debt and unwilling to buy very much (bad) 6) Unemployment Unemployment is a situation where there are qualified individuals actively looking for work who are not able to secure employment The labour force is the total amount of people who are employed and unemployed. The unemployment rate is the percentage of people who are unemployed out of the total labour force. 1). Frictional Unemployment normal labour market turnover people are constantly entering and leaving the labour force. 2. Structural Unemployment the available jobs do not correspond to the skills of the labour force unemployed individuals do not live in a region where jobs are available 3. Cyclical Unemployment related to the pace of the economy or business “cycle.” 4. Seasonal Unemployment is unemployment due to the seasonal nature of the job Chapter 3- The Competitive Context The industry lifecycle model -all industries evolve along particular trajectories and through specific phases from early emergence and growth to their eventual maturity and decline - the phase of an industries evolution along its life cycle is closely related to the evolution of technology within the industry What is an industry Businesses that may have similar resources, technology or consumers Can be defined broadly or narrowly (eg. airline industry vs. transportation industry) Given a long enough period of observation
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