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Chapter 1

MGTA01H3 Chapter Notes - Chapter 1: Oligopoly, Economic Equilibrium, Monopolistic Competition

by OC84

Management (MGT)
Course Code
Chris Bovaird

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Management Chapter 1 Notes
Businessan organization that seeks to earn profits by providing goods and or services
Profit – the money that remains after a business expenses are subtracted from its revenue
Expenses – money that business spend producing its goods and services and generally running the business
Revenuemoney a business earns selling its products and services (sales)
- Businesses must take into account what consumers want or need in order to keep a business going
- If businesses can identify unmet consumer needs or better satisfying them, then they too can be
Economic SystemThe way in which a nation allocates its resources among its citizens
- Economic system differ in terms of how they manage the factors of production
Factors of Production – The resources used to produce goods and services: labour, capital, entrepreneurs and
natural resources. Information resources is now quite often included as the fifth factor as well
o Also known as human resources
o The mental and physical capabilities of people
o The funds needed to operate an enterprise
o 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
o Items used in the production of goods and services in their natural state, including land, water,
mineral deposits, and trees.
Information Resources
o 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
- Two types of Economic system
o Command Economy - And economic system in which government controls all or most factors of
production and makes all or most production decisions
§ Two types of command economy
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
o Market Economies - An economic system in which individuals control all or most factors of
production and make all or most production decisions
o Mixed Market Economy An economic system with elements of both a command economy and
a market economy; in practice, typical of most nations economies
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
Privatization – the process of converting government enterprises into privately owned companies
Deregulation – a reduction in the number of laws affecting business activity.
- Government buys many different products from businesses; many businesses depend on government
- Government competes with business through Crown corporations
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