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Chapter Notes 1-2 part 2.docx

Management (MGT)
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Management Lecture 02
Economics The study of how businesses, people make choices about:
What things to produce/consume
How best to produce things
How best to distribute wealth
Factors of Production:
1. Labour human beings (ex: workers)
2. Natural Resources raw materials found in ground, grown from earth, or
harvested from nature (Ex: Coal, Wheat, Water, Wood)
3. Capital money, machines/tech that money can buy (Ex: Money, Computers,
Phones, Tractors)
4. Entrepreneurs Ppl who assemble and organize the other factors of
production, the individuals who make it all happen
5. Information Resources Info such as market forecasts, economic data, and
specialized knowledge of employees that is sueful to a business and that
helps it achieve its goals.
Q: What’s diff between entrepreneurship and labour? Isn’t entrepreneurship just
another form of labour?
Ans: Perhaps it isn’t the entrepreneurs itself that are the 4th factor but in fact a
culture of entrepreneurship
Economic Systems A country; How these different countries answer the basic
economic Qs: (How to organize factors of production)
Who should own/control the factors of production?
What should be produced with the factors of production?
1. Command (Planned) Economies
Gov owns/controls factors of production
Gov makes decisions
Ex: Former Soviet Union, Cuba, North Korea
2. Market Economies
Individuals own/control factors of production
Individuals make all/most of the decisions
Market Not a physical place; but a bunch of activities. Where exchanges take place
between buyers and sellers.
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