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A033+Intro+to+Business+II

A033+Intro+to+Business+II - Introduction to Management II...

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Introduction to Management II Business and Exchanges – the  Economic System How do Markets Work? Competition and the Structure of Markets The Role of Government in the Market
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Business and Exchanges – the Economic System Economic system Businesses generate profits through  exchanges A group of businesses, and other non- business organizations, the members of  which engage in exchanges in a regular and  organized way, forms an economic system
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Economic Systems How are the factors of production and the  exchanges between businesses  organized in different economic  systems? Who owns and manages the factors of  production? On what basis are decisions made? What is the role of markets in the economic  system?
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Economic Systems Command Systems Market-based Systems Mixed Systems
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Economic Systems Command Systems Centralized, usually government, ownership  of the means of production Centralized, bureaucratic planning of  business decisions Decisions based on goals other than market  considerations
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Economic Systems Command Systems The Hutterites All means of production owned by the colony No private ownership of any goods Planning of all activity by leadership groups Goals of the community are not economic or  market-driven
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Economic Systems Command Systems Hutterites The most successful economic system in  Western Canada Planning exploits economic opportunities People are assigned effectively to an economic  activity and work hard Equipment is used efficiently Community is dedicated to efficiency to handle  growth
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Economic Systems Market-based Systems Individuals, or groups recognized as legal  persons, own the means of production Decisions are made based on perception of  success in the marketplace Activity in markets, and the expectation of  profits, becomes a key goal and only form of  regulation
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Economic Systems Market-based Systems Pure free market systems now rare Historical examples from 19 th  Century Mines, mills and factories of England Great capital empires of later 1800’s
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Economic Systems Market-based Systems Gooderham and Worts Came to Canada in 1832 with 5,000l.
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