Business: an organised effort to make or sell something to customers, who need or want something in
order to make a profit
The Fundamental reason for a business to exist is to make a “profit”
Profit – revenue – expenses
Revenue – The money a business earns selling its product and services
Expenses (Costs) – The amount spent running the business
Characteristics of Business is to take account of what consumers want or need in order to get demands
for the service or goods.
Economic System – The way in which a nation distributes its resources among its citizen
Factors of production – The resources used to produce goods and services.
Key difference between economic systems is how the nation manages the factors of production
Labour (Human resources)– Is the use of mental and physical capabilities (skills) of people
Capital – The funds needed to operate an enterprise, or the machines and technology
Entrepreneurs – An individual who organizes and manages labour, capital, and natural resources
to produce goods and services to earn a profit, but who also runs 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
Information Resources – information such as market forecast, economic data, and specialized
knowledge of employees that is useful to a business and that helps it achieve its goals (ex. GQ
There are two Types of economic systems that manage the factors of production in different ways.
Command Economy – An economic system in which the government controls all or most factors of
production and makes all or most production decisions.
Communism - A type of command economy in which the government owns and operates all industries
(North Korea owning 100% or near of the economy) (Far left on the political scale)
Individuals would contribute according to their abilities (not a choice) and receive economic
benefits according to their needs.
Socialism – A kind of command economy in which the government owns and operates the main
industries while individuals own and operate less crucial industries (Cuba owning more than 50% or the
Individuals owns like restaurants and clothing stores
Allowed to choose occupation and profession (but mostly working for government)
Market Economy – An economic system in which individuals control all or most factors of production
and make all or most production decisions through supply and demand
Capitalism – A kind of market economy offering private ownership of factors of production and of profits
from business activity (0% of government involvement to the economy) (Far right on the Political Scale)
Mixed market economies – An economic system with elements of both a command economy and a
market economy; in practice, typical of most nations’ economies (less that 50% governed ex. Canada