Textbook Notes (362,882)
Canada (158,081)
MGTA01H3 (583)
Chapter 1


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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

CHAPTER 1 - UNDERSTANDING THE CANADIAN BUSINESS SYSTEM The Concept of Business and Report  business: an organization that seeks to earn profits by providing goods and services o businesses must take into account what customers what or need  profit: the money that remains after a business's expenses are subtracted from its revenues  expenses: the money a business spends producing its goods and services and generally running the business  revenues: the money a business earns selling its products and services Economic Systems Around the World  economic system: allocates a nation's 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; human resources o capital  the funds needed to operate an enterprise o 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 o natural resources  items used in the production of goods and services in their natural state o information resources  information such as market forecasts, economic data, and specialized knowledge of employees Types of Economic Systems Command Economies  an economic system in which government controls all or most factors of production and makes all or most production decisions o communism o socialism  government owns and operates the main industries, while individuals own and operate less crucial industries Market Economies  market: mechanism for exchange between the buyers and sellers of a particular good or service  capitalism: offers private ownership of the factors of production and of profits from the business activity Mixed Market Economies  elements of both a command economy and a market economy; typical of most nations' economies  privatization: the transfer of activities from the government to the public sector  deregulation: the reduction in the number of laws affecting business activity Interactions Between Business and Government Government as Customer  government buys thousand of different products and services from business firms  largest purchaser of advertising Government as Competitor  compete with business through Crown corporations; exist at both provincial and federal level Government as Regulator  regulate business activity; protect competition and consumers, achieve social goals, protect the environment Government as Taxation Agent  revenue taxes: taxes whose main purpose is to fund government services and programs  progressive revenue taxes: taxes levied at a higher rate on higher-income taxpayers and at a lower rate on lower- income taxpayers  regressive revenue taxes: cause poorer people to pay a higher percentage of income than richer people pay  restrictive taxes: taxes levied to control certain activities that legislators believe should be controlled Government as Provider of Incentives  offer incentive programs to help stimulate economic development  municipal tax rebates, design assistance programs, remission of tariffs Government as Provider of Essential Services  highways, postal service, minting of money, armed forces, statistical data on which to base business decisions  maintain stability through fiscal and monetary policy  streets, sewage, sanitation systems, police/fire departments, utilities, hospitals, education The Canadian Market Economy The Laws of Demand and Supply  demand: the willingness and ability of buyers to purchase a product or service o law of demand: buyers will purchase more of a product as its price drops and less of a product as its price increases  supply: the willingness and ability of producers to offer a good or serv
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