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MGTA01H3 (583)
Chapter 1

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
MGTA03 - Chapter 1 ECONOMICS SYSTEMS AROUND THE WORLD 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 1. Labour - also called Human Resouces - is the mental n physical training and talents of ppl 2. Capital - The money needed to operate an enterprise. - For small companies: major source of capital cn be personal investment or loans - Revenue cn later become a major source of capital to reuse money to make money! 3. Entrepreneurs - A 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 a failure. 4. Natural resources - Are items used in the production of good n services in their natural state. - Ex. land, water, mineral deposits and trees 5. Information Resources - Info such as market forecasting, economic data, and specialized knowledge of employees that is useful to a business and that helps it achieve its goals. Types of Economic Systems 1. Command Economy - An economic system in which 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 - Socialism: a kind of command economy in which the government owns and operates the main industries, while individuals own and operate less crucial industries. 2. Market Economy - An economic system in which individuals control all or most factors of production and make all or most production decisions. - 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. 3. Mixed Market Economy - An economic system with elements of both a command economy and market economy; in practice, typical of most nations’ economies. - Ex: most countries of the former Eastern bloc have now adopted market mechanisms through a process called privatization. - Privatization: the transfer of activities from the government to the public sector. - Another trend is deregulation. - Deregulation: a reduction in the number of laws affecting business activity. - Deregulation frees companies to do what they want without government intervention, thereby simplifying the task of management. INTARACTION BETWEEN BUSINESS AND GOV’T Government Influencing Business 1. Government as customer - Gov’t purchases goods from companies to, for ex: build roads, use helicopters, cars for police etc… 2. Government as competitor - Gov’t compete with business through Crown corporations, which are accountable to the minister of Parliament for their conduct. - Crown corporations exist at both the provincial and federal level. 3. Government as regulator - Gov’t regulate to: o Protect Competition o Protect consumers o Achieving social goals o Protecting the environment 4. Government as taxation agents - Taxes are imposed and collected by federal, provincial, and local governments - Revenue Taxes/Income taxes: are levied by governments primarily to provide revenue to fund various services and programs. - Progressive Revenue taxes: are levied at a higher rate on higher-income taxpayers and at a lower rate on lower-income taxpayers. - Regressive revenue taxes/sales tax: are levied at the same rate regardless of a person’s income. - Restrictive taxes/Taxes on alcohol, tobacco, and gasoline: are levied partially for the revenue they provide, but also because legislative bodies believe that the product in question should be controlled. 5. Government as provider of incentives - Federal, provincial, and municipal governments offer incentive programs that help stimulate economic development. - Ex: in Québec, Hyundai Motors received $6.4 million to build a production facilit
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