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Chapter all

MGTA01H3 Chapter Notes - Chapter all: Departmentalization, Absolute Advantage, Abraham Maslow

Management (MGT)
Course Code
Bill Mc Conkey

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MGTA03 Exam Notes
Features and Characteristics of Business:
Business: an organization that sells products or services to earn profit
Profit: what the company earns after expenses are subtracted after earned
Expenses: amount put into the organization to run the place
Revenues: the money earned by selling the product or service
Factors of Production:
basic resources needed to run a business
Labour: also called human resources, the people and their skills that serve and make the
products or services
Capital: the money used to run the business, office rooms, supplies, etc.
Entrepreneurs: a person who is responsible for getting the labour, capital, resources to
run the business
Natural Resources: items used to make the products or services in their natural state,
water land wood etc.
Information Resources: information such as market forecast, economic data, and
specialized knowledge of employees that is useful to a business and that helps it achieve
its goal
Economic Systems:
Economic systems also differ in the way decision are made
Governments could also own the factors of production
Command Economy: government makes all the decisions about production and
Examples of CE is communism and socialism
Communism: system in which the government owns and operates all
sources of industries, North Korea
Socialism: government owns and operates only selected major industries,
Socialism is declining in popularity
Market Economies: individuals control production and allocation decisions through
supply and demand
Market: A mechanism for exchange between the buyers and sellers of a
particular good or service.
Both buyers and sellers have a freedom of choice
Capitalism: kind of market economy offering private ownership of the
factors of production and of profits from business activity
Mixed Market Economies: a system with a mix of command and market
economy, Canada, USA, UK, France

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Privatization: the transfer of activities from the government to the public
Deregulation: reduction in the number of laws affecting business
Canada is A mixed Economy: majority of the factors are owned by private individuals,
most decisions made by individuals, government is involved through taxes, regulations
and provides some services
Governments can be customers, competitors, regulators, taxation agent, provider of
incentives, provider of essential services.
Demand: willingness and ability of buyers to purchase a product or service
Supply: willingness and ability of producers to offer a good or service for sale
Law of Demand: The principle that buyers will buy more of the product as the price
Law of Supply: The principle that producers will offer more of a product as price rises.
Supply curve: how many products will be supplied at different prices
Demand curve: how many products will be demanded at different prices
Demand increases as price decreases and vice versa for supply
Intersection of these curves is the market price or equilibrium price, profit maximizing
point, demand and supply quantities and prices are equal
Surplus: quantity supplied exceeds the quantity demanded, money is lost by making the
extra products
Shortage: not enough quantity made, lower revenue then if there were enough quantities
Private Enterprise: an economic system characterized by private property rights,
freedom of choice, profits, and competition
Private Property Rights: ownership of the resources used to
create wealth is in the hands of individuals
Freedom of Choice
Profits: idea of making profits causes more individuals to start
their own business
Competition: between 2 or more individuals
The key goals of the Canadian Economic System:
Economic growth- tools that are used to measure this includes
aggregate output, standard of living, GDP and productivity
Economic stability-threats to this are inflation and unemployment
Full employment
Degrees of Competition:
4 types of competition can be found between individual

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1. Perfect competition: A market or industry characterized by a very large
number of small firms producing an identical product so that none of the
firms has any ability to influence price. (agriculture)
Identical products sold
Buyers and sellers are aware of other store prices
Easy to enter and leave
Prices set by supply and demand
2. Monopolistic Competition: A market or industry characterized by a large
number of firms supplying products that are similar but distinctive enough
from one another to give firms some ability to influence price. (stationery
Includes brand names, design or styling, a d advertising consumers
Relatively easy entrance and exit
Some control over the price
3. Oligopoly: A market or industry characterized by a small number of very
large firms that have the power to influence the price of their product
and/or resources. (steel industry)
Large sellers
Difficult entry
Some level of control over price
4. Monopoly: A market or industry with only one producer, who can set the
price of its product and/or resources. (public utility)
Complete control over price
Entry regulated by government
Natural Monopolies: A market or industry in which having only
one producer is most efficient b/c it can meet all of consumers
demand for the products
How the Economy is Growing:
Business Cycle: Pattern of short-term ups and downs in an economy
This cycle has 4 phases: peak, recession, trough, and recovery
Recession: Period during which aggregate output declines
Depression: severe and long-lasting recession
Aggregate Output: Total quantity of goods and services produced by an economic sytem
during a given period. Main measure of growth in an business cycle
the output grows to quickly, output per capita goes up
Standard of living: Total quantity and quality of goods and services that a country’s
citizen can purchase with the currency used in their economic system.
GDP: Gross Domestic Product: Total amount of goods and services produced in and for
the country
GNP: Gross National Product: Total amount of goods and services produced in a country
Real Growth Rates: Usually measured by GDP
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