Canadian Business System Chapter 3

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Questions and Answers

What is one reason for regulating business activity?

Encouraging monopolies

Protecting competition (correct)

Increasing market prices

Reducing consumer choice

Which type of tax is primarily used to fund government services and programs?

Sales tax

Property tax

Consumer tax

Revenue tax (correct)

What role do lobbyists play in relation to the government?

Providing regulatory oversight

Collecting taxes

Enforcing laws

Representing business interests (correct)

What is the law of demand?

Demand increases as prices drop Signup and view all the answers

In a market economy, what does the term 'market' refer to?

An exchange process between buyers and sellers Signup and view all the answers

What does the market price reflect in a supply and demand framework?

The equilibrium where demand meets supply Signup and view all the answers

Which of the following is NOT a service provided by the federal government to facilitate business activity?

Public relations for businesses Signup and view all the answers

What is the law of supply?

Producers will offer more as prices rise Signup and view all the answers

What characterizes a situation of surplus?

Quantity supplied exceeds quantity demanded Signup and view all the answers

Which element of private enterprise allows individuals to choose their employment?

Freedom of choice Signup and view all the answers

What motivates individuals to start their own businesses in a private enterprise system?

Anticipated profits Signup and view all the answers

What defines perfect competition in a market?

Many small firms producing identical products Signup and view all the answers

How does competition influence businesses in a market economy?

Motivates efficient operations Signup and view all the answers

What is one key condition for perfect competition?

Large number of small firms Signup and view all the answers

Which of the following best describes oligopoly?

A few firms dominate the market Signup and view all the answers

What principle is NOT associated with perfect competition?

Firms have extensive market power Signup and view all the answers

What is a command economy?

A system where the government makes all production decisions Signup and view all the answers

Which of the following is a form of command economy?

Socialism Signup and view all the answers

What describes a market economy?

Individuals control production factors and make decisions Signup and view all the answers

What role does the government play as a customer in the economy?

The government buys products and services from businesses Signup and view all the answers

How does privatization affect the economy?

It moves government activities to the private sector Signup and view all the answers

Which statement best describes the role of government as a regulator?

Regulators ensure fairness and legality in business practices Signup and view all the answers

What is the primary function of output markets?

To facilitate the exchange of goods and services Signup and view all the answers

Which economic system contains elements of both command and market economies?

Mixed market economy Signup and view all the answers

What is the primary goal of a business?

To make a profit Signup and view all the answers

What remains after subtracting a business's expenses from its revenue?

Net profit Signup and view all the answers

Which of the following is NOT a factor of production?

Technology Signup and view all the answers

How do not-for-profit organizations primarily fund their operations?

Through government grants and service sales Signup and view all the answers

What term describes people who create and operate businesses while accepting risks?

Entrepreneurs Signup and view all the answers

Which factor of production includes all physical resources like land and water?

Natural resources Signup and view all the answers

Which economic system allocates resources among citizens based on government control?

Command economy Signup and view all the answers

Which factor of production includes specialized knowledge and expertise?

Information Signup and view all the answers

Study Notes

Nature of Canadian Business

Businesses aim to generate profit through providing goods and services.
Profit is residual income after deducting expenses from revenue, incentivizing investment and risk-taking.
Not-for-profit organizations deliver services without profit motives, depending on grants or service revenues.
Examples of not-for-profit entities include charities, educational institutions, hospitals, and labor unions.

Economic Systems

Economic systems regulate resource allocation based on ownership and control of production factors.
Factors of Production include labor, capital, entrepreneurs, natural resources, and information.
Labor represents the workforce, while capital encompasses funds needed for business operations.
Entrepreneurs manage opportunities and risks in business creation.
Natural resources include physical elements essential for production; information represents specialized knowledge relevant in business contexts.

Types of Economic Systems

Command economies involve government control over production factors and decision-making.
Market economies are characterized by individual control over production factors and decisions.
Communism is a command economy where the government owns all production resources, while socialism allows for some private ownership.
Capitalism relies on market mechanisms to determine what, when, and for whom to produce.
Mixed market economies combine elements of both command and market systems, prevalent in most nations.
Privatization refers to transferring government activities to the private sector.
Deregulation involves reducing governmental regulations impacting business activities.

Government and Business Interaction

Government acts as a customer, purchasing diverse products and services from businesses.
Crown corporations represent government competition with private businesses.
Regulatory bodies oversee business activities, focused on protecting competition, consumers, and the environment.
Taxes collected by various government levels primarily fund public services and programs.
Governments provide incentives and financial assistance to promote economic development.
Essential services from government, such as infrastructure and statistical data, support business operations.
Businesses influence government through lobbyists and trade associations advocating for industry interests.

Demand and Supply in Resource Distribution

Market described as an exchange process involving buyers and sellers.
Demand indicates consumer willingness to purchase, while supply reflects producer willingness to sell.
The Law of Demand states that lower prices increase quantity demanded; the Law of Supply states that higher prices increase quantity supplied.
Market price or equilibrium occurs where quantity demanded equals quantity supplied.
A surplus happens when the supply exceeds demand.

Elements of Private Enterprise and Competition

Private enterprise is defined by ownership rights, individual choice, profit pursuit, and competitive environments.
Ownership involves individuals controlling resources to create wealth.
Freedom of choice allows individuals to select employment and purchase decisions freely, influencing market dynamics.
Profit incentive drives entrepreneurial ventures and impacts production choices.
Competition motivates businesses to enhance efficiency and product quality.

Degrees of Competition

Economists classify competition types based on market characteristics:
- Perfect competition involves many small firms producing identical products with no price control.
- Conditions for perfect competition include numerous small firms, identical products, market price transparency, and ease of market entry/exit.

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Description

Explore the fundamental concepts of the Canadian business system in this quiz, focusing on the nature of business and its key goals. Understand the importance of profit and how businesses contribute to government support and community development.