* What is an economic system?
Business organizations exist in an economic system or environment that provides employment for workers, pays taxes to as many as three levels of government (in Canada), and supports many charities.
The system in which sellers and buyers can exchange goods and services is called a market. The local farmers market is a market. Farmers bring their fruits and vegetables to a single location to attract customers to that location. A stock exchange, like the Toronto Stock Exchange, is another example of a market. This is a market in which people can buy or sell shares.
This chapter will review how the different countries of the world are divided between ...view middle of the document...
Define supply and demand and explain the relevance of the equilibrium point. | In a free market, prices are not determined by sellers; they are determined by buyers and sellers negotiating in the marketplace.
Supply refers to the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time. Generally speaking, the amount supplied will increase as the price increases. Demand refers to the quantity of products that people are willing to buy at different prices at a specific time. Generally speaking, the quantity demanded will increase as the price decreases.
The place where quantity demanded and supplied meet is called the equilibrium point. |
Define socialism and its benefits and negative consequences. | Socialism is an economic system based on the premise that some, if not most, basic businesses—such as steel mills, coal mines, and utilities—should be owned by the government so that profits can be evenly distributed among the people. Historically, socialism has become popular in countries were the government or monarchy became corrupt and average people were not able to buy goods and services at a reasonable price. Free education, health care, child care, and unemployment insurance are some of the benefits evident in socialist countries. However socialist countries are also places were entrepreneurs feel discouraged and many leave to go “make their fortune” in more capitalist countries. |
Understand communism and the challenges of such a system. | Communism is an economic and political system in which the state (the government) makes almost all economic decisions and owns almost all of the major factors of production.
In reality, pure communism does not exist in the world today – China is supposed to be communist, but many private and state owned businesses make great profits by selling products to Europe and North America which has created a class of wealthy people in Beijing. Cuba is supposed to be communist, but its tourist resorts make great profits by hosting Canadian and European travellers. North Korea says it is communist by it is in effect a dictatorship. |
Describe the mixed economy of Canada. | Mixed economies exist where some allocation of resources is made by the market and some is made by the government. “Mixed economies” are a little bit socialist and a little bit capitalist. We have “almost” free health care in Canada, but not free college and university education. |
Discuss the significance of key economic indicators and the business cycle. | Three major indicators of economic conditions are
(1) the gross domestic product (GDP),
(2) the unemployment rate, and
(3) the price indexes.
Knowing how these indicators rise and fall helps businesses plan for the future. |
* The Role of Government
The government provides a number of services and resources for helping businesses expand their operations into other countries. In addition to assisting...