Griffin Chapter 1 Notes Slide

5/20/2018 Griffin Chapter 1 Notes Slide

1/28

CHAPTER

UNDERSTANDING THE

CANADIAN

BUSINESS SYSTEM

Copyright 2014 Pearson Canada Inc. 1-1


2/28

Learning Objectives

1. Define the nature of Canadian businessand identify

its main goals.2. Describe different types of global economic systems,

according to the means by which they control the

factors of production through input and output

markets.3. Show how demand and supply affect resource

distribution in Canada.

4. Identify the elements of private enterprise and

explain the various degrees of competition in theCanadian system.

5. Trace the history of businessin Canada.



3/28

The Concept of Business and Profit(LO 1-1)

Businesses produce orsell products in order to

make a profit

Non-profit Organizations Provide goods and

services but do not seek

profit

schools, hospitals

1-3Copyright 2014 Pearson Canada Inc.

Profit

Revenue

Expense


4/28

Economic Systems Around the World(LO 1-2)

Copyright 2014 Pearson Canada Inc.1-4

The Factors of

ProductionResources used by firmsto create goods and

services

NaturalResources

Capital

HumanResources

Entrepreneurs

InformationResources


5/28

Types of Economic Systems(LO 1-2)

MixedEconomy

SocialismCapitalism Communism

Command

Economies

Market

Economies



6/28


Command Economies

Communism Government owns and operates all industries

It makes decisions regarding distribution of resources

Socialism Government owns and operates all critical industries

utilities and major institutions

Individuals own non-critical businesses



7/28


Market Economies

Economic basis is supply and demand

Political basis is capi ta l ism

Ownership of the factors of production is open

Buyers and sellers have f reedom o f choice

The market is the mechanism for the exchange of

goods and services



8/28


Input market Firms buy

resources from

households

Output market

Households buy

goods and

services from

firms



9/28


Capitalism

Encourages entrepreneurshipand theprivate

ownershipof the factors of production

Encouragesprofit making as an incentive

Operates under the concept of supply and demand



10/28


Mixed Market Economies

Combination of both command and market economies

No country has a pure communist, socialist, or capitalist

system

Privatization

converting government firms into privately owned companies

Nationalization

the conversion of private firms into government-owned firms

Deregulation

reducing laws and government intervention



11/28


Interactions between Business and Government


Customer Competitor Regulator

Taxation

Agent

Provider of

Incentives

Provider of

EssentialServices

f S


12/28


Government as Regulator


Regulates through administrative boards,tribunals, and commissions

Promotes healthy competition betweenbusinesses

Protects consumers

Achieves social goals

Protects the environment

T f E i S


13/28


Government as Taxation Agent


Revenue

Tax

ProgressiveRevenue

Tax

RegressiveRevenue

Tax

Restrictive

Tax Income Tax

T f E i S t


14/28


How Business Influences Government


T f E i S t


15/28


Government as Provider of Incentives

Government provides aid and assistance to small

businesses and non-profit organizations

Incentives stimulate growth in revenues and

employment


T f E i S t


16/28


Government as Provider of Essential Services

All three levels of government provide various services:


Th C di M k t E


17/28

The Canadian Market Economy(LO 1-3)

Insert Figure

1.4, split across

two slides


l d D d


18/28

Copyright 2014 Pearson Canada Inc.

Effects of a Shortage on Price

$20

18 Supply Curve B

16

14 Equilibrium Supply Curve A

Price 12 Price B

10 Equilibrium Price A

8 Demand Curve

6

4

2100 500 1000 1500 2000

Quantity

A shortagedrives

pricesup

upply and Demand(LO 1-3)

Dealing with a Shortage

1-18

S l d D d


19/28

Supply and Demand(LO 1-3)

Dealing with a Surplus

Effects of a Surplus on Price

$20

18 Demand Curve

16

14 Equilibrium Supply Curve APrice 12 Price A

10 Supply Curve B

8

6 Equilibrium

4 Price B

2

100 500 1000 1500 2000

Quantity


A surplusdrives

pricesdown

P i t E t i & C titi i M k t E


20/28

Private Enterprise & Competition in a Market Economy(LO 1-4)

Private enterprise occurs in a market economy

with little government restriction

Under this system individuals

can own property

have freedom of choice

have the freedom to earn profits

have freedom to compete


& C


21/28


Competition

occurs when businesses vie for the same resources or

customers in a particular market or industry.

motivates business to operate efficiently

forces business to make products better or cheaper




22/28


Degrees of Competition


Perfect Competition

Monopolistic Competition

Oligopoly

Monopoly



23/28


Perfect Competition

Has many sellers and the product is basically identical

Relatively easy to enter the industry

Individual firms have no control

over pricethe buyer will purchase from the lowest

price source




24/28


Monopolistic Competition

Has few to many sellers

The product is seen as unique by some buyers, but not

necessarily all

A differentiated brand provides the firm with some

control over pricing


Private Enterprise & Competition in a Market Economy


25/28


Oligopoly

A few large suppliers dominate the market

High barriers to entry

The products are seen as similar; no supplier has an

edge

Each supplier knows what the others are charging

Prices gravitate toward a common market price




26/28


Monopoly

One producer and source of supply

Unique product

Complete control over price

No competitors




27/28


Natural Monopoly

A market or industry in which having only one producer

can sufficiently meet demand

It is the most efficient approach electric power utility


A Brief Histor of B siness in Canada


28/28

A Brief History of Business in Canada(LO 1-5)


The Early Years

The Factory System and the Industrial Revolution

The Entrepreneurial Era

The Production Era

The Sales and Marketing Era

The Finance Era

The Global Era

The Internet Era

Griffin Chapter 1 Notes Slide

Documents

Transcript of Griffin Chapter 1 Notes Slide