study guide for 1st chapter
2 pages83 viewsFall 2010
The concept of Business and profit
Business: An organization that seeks to earn profits by providing goods and services
Profits: What remains (if anything) after a business’s expenses have been subtracted
from its revenues.
Factors of Production: Labor, entrepreneurs ,capital, natural resources,
Input market: Firms buy needed resources
Output market: Firms supply goods& services
Progressive Revenue Taxes:
Regressive Revenue Taxes:
The Entrepreneurial era:1850-1900; anti-combines legislation
The Production Era:1900-1930 Scientific Management Movement; assembly
line Stock; rise of labor union
The Sales Era1930-1940 focus on sales forces, advertising
The Marketing Era: 1950-1960 marketing began to meet consumer wants
The Financial Era: 1980s many mergers and much buying and selling of
The Global Era: last few years; facilitated by advance in production,
computer techs, communication system.
The Internet Era: internet affects business in at least 3 ways:
Money has three functions:
1.Method of Exchange -replaces barter
2.Store of Value –carry command over goods and services into the future
3.Unit of Account –a „common denominator if different goods owned or
„money multiplier: a „base amount of money could yield a larger „money
supply by re-lending
Wealth Creation in Canada
Wealth (n): an abundance of material possessions and resources; property
that has economic utility
Today, Canadas wealth is derived mostly from trade (and mostly with U.S.)
In the 1950s there emerged the idea that there were three „worlds
–First World: Industrialized, „capitalist economies –W. Europe, N. America,
–Second World: Industrialized centrally-planned (Communist) economies –
Soviet Union and its Eastern European satellites
–Third World: All „less-developed or non-industrialized economies, no matter
what their political or market system.
First World Economies:
1) Stabilization–dealing with inflation as well as depression; and the shift to
monetary policy for stabilization
2) Internationalization–lowering trade restrictions and improving international
•The industrialized economies have avoided another Great Depression –
although there have been economic downturns („Recessions)
•They have learned the policy lessons of Keynes and his followers
•Capitalist economies have gradually become more service based, and less
manufacturing based, which adds stability
BUTthere was an opposite problem to Depression –an economy trying to
produce too much –that the industrialized economies blundered into
starting in the late 1960s.
•An economy that is over-heated or over-stimulated (by government policy)
has its prices rise (as demand exceeds supply).
•This is Inflation!
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