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Economic Systems and Business Impact
 

Economic Systems and Business Impact

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BBI Unit two, chapter 4

BBI Unit two, chapter 4

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    Economic Systems and Business Impact Economic Systems and Business Impact Presentation Transcript

    • Chapter 4
    • Economic Systems
      • An ECONOMIC SYSTEM is the way government and businesses work together to provide goods and services to consumers.
      • The system answers the three basic economic questions
        • What to produce?
        • How to produce it?
        • For whom to produce?
    • Types of Economic Systems
      • Traditional Economy
        • Manner of production and the goods produced are the same as in the past
        • Each family produces what they need
        • Extra goods are traded
        • Today these societies are in very remote areas (ex: Bedouin in the Sahara Desert)
      • Pure Command Economy
        • Government owns the natural resources, farms, factories, machinery, offices, and most businesses
        • Government controls all decision-making including what goods to produce, wages, etc.
    • Economic Systems
      • Pure Market Economy (Free Market / Free Enterprise / Capitalist System)
        • The buyers and sellers control the actions of the marketplace
        • Consumer determine what will be produced
        • Competition determines how goods will be produced
        • Businesses are “free” to establish a place of operation and make a profit
        • Consumers are “free” to buy products where and when they want
      • Modern Mixed Economy
        • Contains elements of both models
        • Buyers and sellers control the marketplace and the government plays a role to ensure that the economy operates smoothly
    • The Public & Private Sector
      • The PRIVATE SECTOR of the market consists of businesses that are privately owned and operated. Their primary purpose is to make a profit.
        • Eg. Fortinos, McDonalds, Wal-Mart
      • The PUBLIC SECTOR of the market consists of businesses are owned by some level of government (municipal, provincial, federal).
      • These businesses operate to provide basic services to Canadians. They usually are not in business to make a profit.
        • Eg. Schools, CBC
    • Public-Private Partnerships
      • PUBLIC-PRIVATE PARTNERSHIPS are common when one sector operates a joint venture with the other sector. This is often used when a large amount of capital is needed but a great deal of regulation is required.
      • Eg. The Olympics
    • Privatization
      • PRIVATIZATION occurs when a publicly owned company is sold to the private sector.
      • Eg. Ontario Hydro, Petro-Canada
    • Impact of Business on the Community
      • Wealth generation
      • Job Generation
        • Based on:
          • Consumer demand
          • The business cycle
          • Technical improvements
          • Competition
      • Income Generation
        • Sales, interest, investing
    • Impact of Business on the Community
      • Standard of living
        • Way a person lives as measured by the kinds and quality of goods and services that person can afford
      • Quality of life
        • For the worker, for the community
        • Can be positive or negative
      • Changing community