Chapter 1 BUS 201

What is the main objective of Canadian business?

What is the main objective of Canadian business?

To generate profit by producing or providing goods and services.

What does the Shopify case exemplify about business?

Entrepreneurship, innovation, adaptability, and the importance of corporate and brand strategy.

Define 'business.'

An organization established to generate profit by providing goods or services.

How do businesses impact the Canadian economy?

Businesses drive job creation, innovation, and economic growth.

What is 'profit' in business terms?

The amount remaining after expenses are subtracted from total revenue.

Give an example of a profitable entertainment company.

Lionsgate, known for The Hunger Games series, which grossed approximately $3 billion.

What is a 'not-for-profit organization'?

An organization that provides services without seeking to make a profit, often funded by grants or service revenue.

List examples of not-for-profit organizations.

Charities, schools, hospitals, labor unions, government agencies.

What is an economic system?

A system that allocates resources within a country based on ownership and control of production factors.

Name the five factors of production.

Labor, capital, entrepreneurs, natural resources, information.

What is 'labor' in the context of production factors?

The workforce, including all mental and physical capabilities of people.

Define 'capital' as a factor of production.

Financial assets needed to start, sustain, and grow a business.

What is the role of an entrepreneur?

To identify opportunities, take risks, and manage the creation and growth of a business.

Give an example of a natural resource.

Oil, water, minerals, land.

How does information serve as a factor of production?

It includes specialized knowledge, data, and insights that aid in decision-making.

Describe a command economy.

An economy where the government controls production, allocation, and resource distribution.

What is communism?

A command economy where the government owns and operates all sources of production.

Define socialism.

A command economy where the government owns major industries, but small businesses can be privately owned.

What is a market economy?

An economy driven by supply and demand, with minimal government intervention.

What is the circular flow model?

It illustrates how resources and goods flow between households and businesses in a market economy.

What is capitalism?

A free-market economy where individuals and businesses own resources and are incentivized by profit.

How does capitalism differ from a command economy?

Capitalism allows private ownership and choice, while a command economy involves government control over resources and decisions.

What is the primary purpose of the government in a market economy?

To create stability, support infrastructure, and provide essential services to encourage business activity.

Name three services the federal government provides to support business activity.

Highways, postal service, and the minting of money.

What are public-private partnerships (P3s)?

They are arrangements where the government hires private companies to build, finance, and operate facilities like hospitals and transit lines.

How does lobbying influence government decisions?

Companies or industries hire lobbyists to advocate for their interests with government officials, potentially shaping policy and regulation.

What does the federal Lobbying Act require?

Lobbyists must register with the Commissioner of Lobbying and report details of their interactions with public office holders.

What is a trade association, and what role does it play for small businesses?

A trade association represents industry interests, influences legislation, and offers training and networking opportunities to members.

Define 'market' in economic terms.

An exchange process between buyers and sellers.

What does the law of demand state?

Buyers will purchase more of a product as its price decreases.

What happens when there is a surplus of a product?

The quantity supplied exceeds the quantity demanded, leading to potential financial losses for the seller.

What occurs when there is a shortage of a product?

The quantity demanded exceeds the quantity supplied, resulting in lost sales opportunities.

Explain the significance of the equilibrium price.

It’s the price at which the quantity of goods demanded and supplied are equal, optimizing resource use.

What are the four elements of private enterprise?

Private property rights, freedom of choice, profits, and competition.

How does competition benefit consumers?

It improves product quality, lowers prices, and fosters innovation.

Describe 'perfect competition.'

A market with many small firms where no single firm can influence the product price.

What differentiates monopolistic competition from perfect competition?

Businesses in monopolistic competition can differentiate their products, giving them some price control.

How does an oligopoly differ from a monopoly?

An oligopoly has a few large firms controlling a market, whereas a monopoly has only one producer.

What is a 'natural monopoly,' and give an example.

A monopoly allowed by the government due to high infrastructure costs, like a utility company.

What is the main goal of businesses?

To produce or sell goods and services for profit, which is the difference between revenue and expenses.

How do business activities benefit society?

Create job opportunities, provide goods and services, support communities and encourage innovation

What is an economic system?

A system for allocating a nation’s resources among its citizens.

How do command and market economies differ in controlling factors of production?

In command economies, the government controls most factors, while in market economies, individuals and businesses control them through input and output markets.

What is a mixed market economy?

An economic system that includes elements of both command and market economies, with varying levels of government intervention.

How can businesses influence government in Canada?

Through lobbying, joining trade associations, and influencing public opinion on regulations.

Define demand and supply.

Demand is the willingness and ability of buyers to purchase a good or service, while supply is the willingness and ability of producers to offer goods or services for sale.

What determines the market or equilibrium price?

It’s the price at which the quantity demanded and quantity supplied are equal.

What are the elements of private enterprise?

Private property rights, freedom of choice, profits, and competition.

Name the four degrees of competition in the Canadian economic system.

Perfect competition, monopolistic competition, oligopoly, and monopoly.

What are some benefits of businesses, and how can they negatively affect society? Provide examples.

Benefits include job creation and tax revenue; however, some businesses can cause environmental harm. For example, renewable energy companies benefit society, whereas pollution from some factories has negative impacts.

Describe a situation in which a product surplus led to decreased prices. What happened next?

When a surplus occurs, prices drop due to excess supply. For example, seasonal produce often goes on sale when there’s an abundance. The market eventually balances as demand adjusts to lower prices.

Why might government export assistance, like for Bombardier, conflict with free-market principles?

It can distort competition by giving an advantage to a company that might not be as competitive without government support.

What is an example of a product sold under pure competition? What makes it an example of pure competition?

Agricultural products like wheat are sold under pure competition because many sellers offer a standardized product, with prices governed by demand and supply.

How do the factors of production contribute to the availability of a product you use?

The factors of production (land, labor, capital, entrepreneurship) determine product availability by supplying necessary resources and processes. For example, labor ensures production, capital provides machinery, land offers raw materials, and entrepreneurship coordinates resources effectively.