Textbook Notes (378,537)
CA (167,156)
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Rotman Commerce (1,015)
RSM100Y1 (431)
Chapter 1

Chapter 1 Summary

5 Pages
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Department
Rotman Commerce
Course Code
RSM100Y1
Professor
Michael Szlachta

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Chapter 1
Economic System - The way in which a nation allocates its resources among its citizens
Factors of Production The resources used to produce goods and services: labour,
capital, entrepreneurs, and natural resources.
Labour The mental and physical training and talents of people.
Capital The funds needed to operate an enterprise.
- Investment by owners, entrepreneurs, partners who start the business, or investors
who buy stock
Entrepreneurs An individual who organizes and manages labour, capital, and
natural resources to produce goods and services to earn a profit.
Natural Resources Items used in the production of goods and services in their
natural state, including land, water, mineral deposits, and trees.
Information Resources 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.
Types of Economic Systems
Command Economy An economic system in which government controls all or most
factors of production and makes all or most production decisions.
Communism A type of command economy in which the government controls all or
most factors of production.
Socialism A kind of command economy in which the government owns and
operates the main industries, while individuals own and operate less crucial
industries.
- Large proportion of people work for the government
Market Economies An economic system in which individuals control all or most factors
of production and make all or most production decisions.
- B2B (business to business transactions) is more efficient than B2C (business to
consumer, ordering things over the internet).
- Very little government involvement.
www.notesolution.com
Input Market - Firms buy resources that they need in the production of goods and
services.
Output Market Firms supply goods and services in response to demand on the
part of consumers.
Capitalism An economic system in which markets decide what, when, and for
whom to produce.
Mixed Market Economy An economic system with elements of both a command
economy and a market economy; in practice, typical of most nations economies
Privatization - Converting government enterprises into privately owned
companies.
Nationalization Converting private firms into government-owned firms.
Deregulation A reduction in the number of laws affecting business activity and in
the powers of government enforcement agencies.
- Deregulation freed companies to do what they wanted without government
invention.
www.notesolution.com

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Description
Chapter 1 Economic System - The way in which a nation allocates its resources among its citizens Factors of Production The resources used to produce goods and services: labour, capital, entrepreneurs, and natural resources. Labour The mental and physical training and talents of people. Capital The funds needed to operate an enterprise. - Investment by owners, entrepreneurs, partners who start the business, or investors who buy stock Entrepreneurs An individual who organizes and manages labour, capital, and natural resources to produce goods and services to earn a profit. Natural Resources Items used in the production of goods and services in their natural state, including land, water, mineral deposits, and trees. Information Resources 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. Types of Economic Systems Command Economy An economic system in which government controls all or most factors of production and makes all or most production decisions. Communism A type of command economy in which the government controls all or most factors of production. Socialism A kind of command economy in which the government owns and operates the main industries, while individuals own and operate less crucial industries. - Large proportion of people work for the government Market Economies An economic system in which individuals control all or most factors of production and make all or most production decisions. - B2B (business to business transactions) is more efficient than B2C (business to consumer, ordering things over the internet). - Very little government involvement. www.notesolution.com
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