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nickels ch 2

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University of Toronto Mississauga
James Appleyard

Lecture 3 MarketsThe Economic Environment Nickels Ch 2Sunday September 12 2010415 PMHOW ECONOMIC CONDITIONS AFFECT BUSINESSBusiness firms useLabour from other countriesExport to and import from other countriesBuy land in other countries for their facilitiesReceive money from foreign investorsAny change in our economic or political system can have a major influence on businessesWhat is EconomicsEconomicsstudy of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individualsFactors of production resourcesLandLabourCapital goodsEntrepreneurshipKnowledgeContribute to economic system by inventing products that greatly increases available resourcesMacroeconomicspart of economic study that looks at the operation of a nations economy as a wholeHow many jobs exist in the whole economyMicroeconomicspart of economic study that looks at the behaviour of people and orgs in particular marketsHow many people will be hired in a particular industry or particular region of the countryResource developmentstudy of how to increase resources and the creation of the conditions that will make better use of those resources eg Recycling oil conservationGrowth Economics and Adam SmithOne of the first ppl to imagine a system for creating wealth and improving the lives of everyoneCreating more resources so that everyone could become wealthierVital to survival of economy freedomPpl will work hard if they have incentives for doing soHow Businesses Benefit the CommunityPpl generally work for their own prosperity and growth no one helpsInvisible handdescribes the process that turns selfdirected gain into social and economic benefits for allFarmer grow crops and sellFarmer makes moneyPeople get foodFarmer makes more money by hiring more workers and selling more cropsPeople get jobsAs ppl become wealthier ppl would naturally reach out toe help the less fortunateUNDERSTANDING FREEMARKET CAPITALISMBased on adam smiths theory ppl hired others to work on their farms and factories and nations began to prosperCapitalisman economic system in which all or most of the factors of production and distribution are privately owned and operated for profitFree market economicsNot owned by the governmentGovt often gets involved in determining decisions about wages MGM101 Page 1
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