MGTA01H3 Chapter Notes - Chapter 1: Oligopoly, Economic Equilibrium, Monopolistic Competition
Management Chapter 1 Notes
Business – an 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
(cost)
Revenue – money 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
successful
Economic System – The 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
Labour
o Also known as human resources
o The mental and physical capabilities of people
Capital
o The funds needed to operate an enterprise
Entrepreneurs
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
industries
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
purchasing.
- Government competes with business through Crown corporations
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Document Summary
Business an 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 (cost) Revenue money 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 successful. Economic system the 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. Labour: also known as human resources, the mental and physical capabilities of people.
