be ebert ch01

CHAPTER 1

The Canadian Business System

Business Essentials, Fifth Canadian Edition, by Ebert, Griffin, & Starke

Copyright 2009 Pearson Education Canada

1-2

The Concept of Business and ProfitBusinesses produce or sell products in order to make a profit Profitthe money left over from revenues after a firm pays its expenses motivates individuals to engage in business activities



1-3

Factors of ProductionCapital Factors of Production Natural -resources used by firms Resources to create goods & services Information Resources Labour (Human Resources)

Entrepreneurs



1-4

Types of Economic Systems Command economiesCommunist Socialist

Market economies Mixed market economies



1-5

The Communist Model

Government owns the factors of production and makes all decisions regarding distribution of resources

Government owns all industries, including essential services



1-6

The Socialist Model

The government owns and operates all critical industries such as utilities & major institutions

Individuals own noncritical businesses



1-7

Market EconomyEconomic basis is supply & demand Political basis is capitalism Ownership of the factors of production is open to all Buyers and sellers have freedom of choice The market is the mechanism for the exchange of goods and services



1-8

The Mixed Market EconomyMixed market economy a combination of both freedom & government intervention Most countries have some form of mixed market economy

Privatization - converting government enterprises into private companies opposite is nationalization Deregulation reducing laws and government intervention affecting business activity



1-9

Circular Flow in a Market Economy

FIRMSSupply products in output markets Demand resources in input markets

OUTPUT MARKETS Goods and Services

INPUT MARKETS:Labour Capital Entrepreneurs Physical resources Information resourcesBusiness Essentials, Fifth Canadian Edition, by Ebert, Griffin, & Starke

HOUSEHOLDS:Demand products in output markets Supply products in input markets


1-10

The Many Roles of GovernmentCustomer Regulator Competitor Taxation Agent Provider of Incentives Provider of Essential ServicesBusiness Essentials, Fifth Canadian Edition, by Ebert, Griffin, & Starke Copyright 2009 Pearson Education Canada

1-11

Economic Administration and Regulation

The government manages and regulates business Textile Labelling Act Canada Water Act

Competition Act

Canadian Radio television and Telecommunications Commission (CRTC)

Environmental Contaminants Act Fisheries Act Tobacco Act Food and Drug Act Canadian Wheat Board Hazardous Products Act Canadian Transport CommissionCopyright 2009 Pearson Education Canada

Weights and Measures Act

Provincial Boards


1-12

How Business Influences GovernmentBusiness

Lobbyists

Trade Associations

Advertising

Government

Lobbyists must register to be in accordance with the Lobbyists Registration ActBusiness Essentials, Fifth Canadian Edition, by Ebert, Griffin, & Starke Copyright 2009 Pearson Education Canada

1-13

Supply and DemandSupply and Demand Analysis for Pizzas $20 18 16 14 Price 12 10 8 6 4 2

Demand Curve Equilibrium Price and Quantity Supply Curve

100

500

1000Quantity

1500

2000



1-14

Dealing with a Shortage

A shortage drives prices up.

Effects of a Shortage on Price $20 18 16 14 Equilibrium Price 12 Price B 10 8 6 4 2 100 500

Supply Curve B Supply Curve A Equilibrium Price A Demand Curve

1000Quantity

1500

2000



1-15

Dealing with a SurplusEffects of a Surplus on Price

A surplus drives prices down

$20 18 Demand Curve 16 14 Equilibrium Supply Curve A Price 12 Price A 10 Supply Curve B 8 Equilibrium 6 4 Price B 2 100 500 1000 1500 2000Quantity



1-16

Private EnterprisePrivate enterprise occurs in a market economy Under this system individuals Can own property Have freedom of choice Have the freedom to earn profits Have freedom to compete

Government interference is minimal



1-17

CompetitionWhen 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



1-18

Degrees of Competition Perfect Competition Monopolistic Competition Oligopoly Monopoly



1-19

Brief History of Business in CanadaThe Early Years The Factory System and the Industrial Revolution The Entrepreneurial Era The Production Era



1-20

Brief History of Business in CanadaThe Sales and Marketing Eras The Finance Era The Global Era The Internet Era



be ebert ch01

Documents

canadian edition

starke copyright

quantity business essentials

minimal business essentials

concept of business

starke households

input markets copyright

demand curve equilibrium