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MGTA01H3 (583)
Chapter 1

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University of Toronto Scarborough
Management (MGT)
Bill Mc Conkey

mMGTA03H3 – READING NOTES – CHAPTER 1  Business: an organization that seeks to earn profits by providing goods and servicees  Profit: the money that remains after a business’ expenses are subtracted from its revenues  Expenses (costs): The money a business spends producing its good s and services and generally running the business.  Revenues (sales): The money a business earns selling its goods and services.  Consumers have the freedom of choice  Economic system: the way in which a nation allocates its resources among its citizens  Factors of production: the resources used to produce goods and services o Labour: the mental and physical training and talents of people o Capital: the funds needed to operate an enterprise o Entreprenuers: 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 o Natural resources: Items used in production of goods and services in their natural state, including land, water, mineral desposits, and trees o Information resources (the “fifth” factor): information such as market forecasts, economic data, and specialized knowledge of employees that is useful to a business and that helps it achieve its goals  Command Economy: an economic system in which govt controls all or most factors of production and makes all or most decisions o Communism: a type of command economy in which the govt owns and operates all industries  Karl Marx (pg 8) o Socialism: A kind of command economy in which the govt owns and operates the MAIN industries, while individuals own and operate less crucial industries  Market economy: an economic system in which individuals control all or most factors of production and make all or most production decisions o Market: a mechanism for exchange between the buyers and sellers of a particular good or service  Capitalism: a kind of market economy offering private ownership of the factors of production and of profits from business activity  Mixed market economy: an economic system with elements of both a command economy and a market economy, in practice, typical of most nations’ economies o Privatization: the transfer of activities from the govt to the public sector  Ie. The postal system in most countries is govt own and
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