1.3: Business as an Economic System Flashcards
What is an economic system?
An economic system is an arrangement using land, labor, and capital to produce, distribute, and exchange goods and services to meet the needs and wants of people in society.
It is how a society’s resources are used to satisfy societal needs.
What is capitalism?
Capitalism is an economic system that allows for private ownership of the means of production (land, labor, capital) and assumes that economic decision-making is in the hands of individuals or enterprises seeking to earn a profit.
What is the free enterprise system?
The free enterprise system is an economic system characterized by ownership of private property by individuals and enterprises, a profit motive, a competitive market system, and no involvement by the government in business activities.
What is laissez-faire capitalism?
Laissez-faire capitalism is an economic system with absolute minimum government interference in business, limited to essential services like police and fire protection.
The term means “allow to do” in French.
What is a responsible enterprise system?
A responsible enterprise system is a free enterprise system that includes accountability, meaning businesses are responsible to society for their actions and must answer for their role as a cause, agent, or source of something.
What are the key components of Adam Smith’s economic theory?
Homo economicus: People act out of self-interest, pursuing wealth for personal gain.
The Invisible Hand: Competitive markets distribute society’s scarce resources efficiently without government intervention, benefiting everyone.
What are some issues related to the Canadian economic system?
Rising “prosperity tide” does not benefit all, with homelessness increasing.
Past issues include poor working conditions, monopolistic behaviors like price fixing, and business’s failure to address social problems like discrimination and environmental impact.
What are the three sectors of the economy in Canada?
Private Sector: Provides most consumer goods and services.
Public Sector: Provides services like healthcare, education, and infrastructure.
Non-Profit Sector: Addresses societal needs, contributing to GDP.
