Textbook Notes (368,552)
Canada (161,962)
RSM100Y1 (431)
John Oesch (214)
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Department
Rotman Commerce
Course
RSM100Y1
Professor
John Oesch
Semester
Fall

Description
Chapter 1The Ups and Downs of CommoditiesThe Concept of Business and Profit y Business an organization that seeks to earn profits by providing goods and services in effort to make a profit y Profit what remains if anything after a businesss expenses have been subtracted from its revenue Profits rewards the owners of businesss for taking the risks involved in investing their time and moneyy In Canadas economic system businesses exist to earn profits for owners who are free to set them up But consumers also have freedom of choice so businesses must take into account what consumers want or need No matter how efficient a business is it wont survive if there is no demand for its goods or services y The opportunity always involves goods or services that consumers want or needespecially if no one else is supplying them or if existing businesses are doing so inefficiently or incompletely yA healthy business climate contributes directly to our quality of life and standard of livingy New forms of technology service businesses and international opportunities promise to keep production consumption and employment growing indefinitely not always smoothly y Business profits enhance the personal incomes of millions of owners and stockholders and business taxes help to support governments at all levels Many businesses also support charities Economic Systems Around the WorldFactors of Productiony Economic systemthe way in which a nation allocates its resources among its citizensy The key difference between economic systems is the way in which they manage the factors of productionhe basic resources that a countrys businesses use to produce goods and services Traditionally economists have focused on four factors of production labor capital entrepreneurs and natural resources Information resources are now often included as well Labor y The people who work for a company represent the first factor of production labor Sometimes called human resources labor is the mental and physical capabilities of peopley Employees who are well trained and knowledgeable can provide a real competitive advantage for a companyCapitaly Obtaining and using labor and other resources requires capitalthe financial resources needed to operate an enterprise Capital is needed to start a new business and then to keep it running and growingy A major source of capital for small businesses is personal investment by owners Investments can come from individual entrepreneurs from partners who start businesses together or from investors who buy stocksy Revenue from the sale of products is a key and ongoing source fo capital once a business has opened its doorsEntrepreneursy Entrepreneurs are people who accept the opportunities and risks involved in creating and operating businesses Natural resources y Natural resources include all physical resources such as land water mineral deposits and treesy Imperial Oil makes use of a wide variety of natural resources It obviously has vast quantities of crude oil to process each yeary Imperial Oil also needs the land where the oil is located as well as land for its refineries and pipelines Information resourcesy Information resources include the specialized knowledge and expertise of people who work in businesses as well as information that is found in market forecasts and various other forms of economic data y Much of what businesses do results in either the creation of new information or the repackaging of existing information for new users and different audiences Types of Economic System y A command economy relies on a centralized government to control most factors of production and to make most production and allocation decisionsy In market economies individualsproducers and consumerscontrol production and allocation decisions through supply and demandCommand Economies y Two most basic forms of command economies are communism and socialism y Communism is a system in which the government owns and operates all sources of production Marx envisioned a society in which individuals would ultimately contribute according to their needs He also expected government ownership of production factors to be only temporary Once society had matured government would wither away and the worked would gain direct ownership But Marxs predictions were faulty and most countries abandoned communism in favor of a more marketbased economy
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