BUS 200 Lecture Notes - Lecture 1: Market Economy, Nonprofit Organization, Canadian Business
8 Dec 2017
School
Department
Course
Professor
Understanding the Canadian Business System
Business- an organization that produces or sells good or services in an effort to make a profit.
• Profit organization- a business that wants to make as much money as possible
• Non-profit organization- all profit made is immediately put right back into the business in order
to better it
• Social Venture- looking to generate a profit in order to sustain a social objective
Profit- what remains after a business’s expenses have been subtracted from its revenue
Economic Systems- the way a nation allocates its resources among its people. Differ in how they
manage factors of production (resources used)
• Command economy- government controls all factors of production and makes all decisions
• Market economy- individuals control all factors of production and make decisions
Factors of Production:
• Labour- people working for the business, specifically their mental and physical capabilities
• Capital- funds needed in order to start a business and to keep it operating and growing. Usually
comes from owner, investors, profit, and funds borrowed from bank
• Entrepreneurs- people who take the risks and opportunities involved in order to start a business
• Natural resources- all physical resources. Examples: water, land, trees
• Information resources- specialized knowledge and expertise of employees and economic data
Economic Systems
Command Economies
• Communism- government owns and operates all sources of production. Individuals contribute
according to their abilities and receive economic benefits according to their needs. Doesn’t
actually work in the real world
• Socialism- governments only owns and operates selected major industries. Workers are allowed
to choose their own occupation but most end up working for the government. Also fails because
high positions are usually political moves instead of given to someone with the required skill
Market Economies
• Market- is a mechanism for exchange between buyers and sellers of a particular good or service.
Not regulated by government so vendors can sell their goods are whatever cost they want. But
assuming quality of the product is the same the consumer is more likely to buy a specific item
from the person selling it at the lowest price. A market does not have to be one specific place
• 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 the
consumers
• The activity of these two markets creates a circular flow
• Capitalism- markets decide what, when and for whom to produce
Mixed Market Economy
• both command and market economies are extremes so mixed market is the realistic economy
that contains elements of both of these
• Canada has a mixed market economy
• Privatization- converting government enterprises into privately owned companies
Document Summary
Profit- what remains after a business"s expenses have been subtracted from its revenue. Economic systems- the way a nation allocates its resources among its people. Differ in how they manage factors of production (resources used: command economy- government controls all factors of production and makes all decisions, market economy- individuals control all factors of production and make decisions. Labour- people working for the business, specifically their mental and physical capabilities: capital- funds needed in order to start a business and to keep it operating and growing. Usually comes from owner, investors, profit, and funds borrowed from bank: entrepreneurs- people who take the risks and opportunities involved in order to start a business, natural resources- all physical resources. Information resources- specialized knowledge and expertise of employees and economic data. Command economies: communism- government owns and operates all sources of production. Individuals contribute according to their abilities and receive economic benefits according to their needs.
