DON’T ROUND OFF -

Name the 4 types of industries:

Industry types – ON TEST
Primary (raw goods), Secondary (mills and factories), Tertiary (retail/schools/hospitals/government),
Quaternary (tech)

Primary: Resource extraction, farming, fishing, forestry, mining, hunting.

Secondary: Manufacturing, steel mills, paper mills, automobile assembly plants, breweries, furniture and
appliance factories.

Tertiary: Provision or services, wholesale and retail sales outlets, medical clinics, legal offices, schools.

Quaternary: Provision of highly specialized and expensive tech, research and development labs,
information tech design, nuclear tech.

ON TEST
Sole Proprietorship Partnership Corporation
Advantages •Own boss •Personal assets seized to pay •Articles of corporation needed. Assets
•License or business debt up to what was divided into shares sold to shareholders.
vendor’s permit invested. Shareholders can re-invest.
•Registered name Easier to get credit and •Dividends can be given out for the shares
•Most popular therefor capital – preferred get profits first, common
shares, later.

Disadvantages •Personal liability, •Progressive tax. •Shareholders can opt for limited personal
personal assets •Joint liability. liability.
seized to pay •Disputes. •Legal fees high.
business debt. •Do not last long. •Reduced personal incentive given you
•More taxes paid have investors.
due to progressive •Careful bookkeeping.
tax rates.

Advantages disadvantages
ON TEST

Bonds: LOAN! Low return rate, loan to Government or companies less risky
Shares: PRECENTAGE OF OWNERSHIP, shares are traded on the Toronto Stock Exchange; Price
of stock fluctuates based on supply and demand. Some stocks have dividends
Mutual Funds: UNBRELLA WITH A WHOLE BUNCH OF STOCKS (snp500), big grouping Safer
since a fund manager lumps together investment dollars for many clients and amasses a
diversified portfolio, then manages the fund.
Commodities Markets: Wheat, corn, oil don’t know what’s going to happen do a contract and
don’t know what’s going to happen to it Standardized raw or semi-processed goods from the
primary industry are traded in bulk, gold, heating oil, gasoline, corn and wheat. Placing a
bet Metal, agriculture, and energy (main ones)

bear and a bull in the stock market

Bear - stockbrokers who expect the stocks to fall
Bull - brokers who try to increase demand by purchasing in hopes of creating more demand expecting
the price to increase.

A bull is a stock market speculator who buys a in a stock in the expectation that it will rise in value
whereupon they will sell the stock to make a quick profit on the transaction.

Q2, why the drop in GDP?

-38.7%
COVID 19
Due to record drops in spending which is due to businesses staying closed and Canadians stayed
home. Millions are out of work.
•Household spending dropped by 13.1%.
•Business investment fell by 16.2%

GNP
CITZENS PRODUCTION- CANADIANS PRODUCING OUTSIDE OF CANADA (LULULEMON MAKING IN CHINA)
•Total $ value of all final goods and services produced annually by Canadian residents, whether these
resources are located in Canada or abroad.

GDP
ALL PRODUCTION INSIDE OF CANADA
•Total $ value of all final goods and services produced annually within the boundaries of the US whether
by Canadians or foreigners.

Real GDP
•Total $ value divided by CPI. Taking inflation out and drawing a direct comparison with a 100CPI year.
 Firm competitions

Market- A group of buyers and sellers.

Competition is the mechanism that ensures firms remain accountable to consumers as well
as to their managers and shareholders.
Perfect Competition
o Imagine you are selling pies in a community Centre all pies are the same price
o Everything is the same price as your competitors
Monopolistic competition
o H&M – advertising, brand, bags, can charge more
o Cobs bread- brand, packaging, sell at any price
o Has product some differentiation.
o Many firms. Some competition as the product is similar but
not identical.
o The larger firms have enough influence over supply and price.
o Easy for a new firm to start up.
Oligopoly
o Cable television, and commercial air travel
o Dominated by a few large firms.
o Firm’s freedom to set prices varies from slight to substantial.
o Significant financial and other barriers to entry exist.
o Non price competition is intense.
o Customers are frustrated as prices go up/down for no apparent reason, see gas prices or
bank fees. All stay within a particular range.
Monopoly
o One large firm
o Unique
o No direct competition, no need to engage in on-price competition.
o Usage of copyright or patent laws.
o CRTC has to okays services in radio and cable.
o Natural monopoly – Hydro. City utilities (water and sewage).
How firms think?
PROFIT

Short run:
o maximum capacity which is fixed because of a shortage of a resource
Long run:
o All costs are variable, can hire more employees, more raw materials, more fuel for
increased production. No fixed costs of production. Spread over time, fixed costs are
negligible as the firm expands. It’s mostly variable that count

Quantity
o Are how many products will you produce
Variable costs
o How much it costs to make each item one item = $3 (2x3= 6)

What is invisible hand?

MAXIMISE PROFITS
Total profit = (price x quantity sold)-(fixed and variable costs)

Productivity – producing as much as possible.

Efficiency – producing at the lowest cost.

Output per worker- productivity.

o If we you have great productivity, you can lower prices, sell more. This means your
employees are better trained, perhaps educated and you have state of the art
machinery.

Have companies specialize

• Bigger firms are able to negotiate better for supplies, Walmart vs. Mama pies.
• More machinery that can be replaced/fixed quickly
• Specialization is the flattening line in MC (marginal costs)

Total variable cost is the total cost minus the fixed cost (cost at 0)

Marginal costs
Fixed costs- Rent - $1000
Variable costs, how much to make each product - $300
Fixed costs = Total production costs — (Variable cost per unit * Number of units
produced)

0 -$1000
1 -$1300
2 - (1000/2+ (300 x 2) = 1100
3 - (1000/3+ (300 x 3) = 1233
Reason MC (marginal costs) have the hook is first one has rent costs high and variable costs
high on the first product

Is because you have to pay rent even if you make 1 or 500 products
fixed costs go lower and lower each time

Marginal revenue (MR) is needed to find the profit-maximizing quantity of output, or the
quantity of output where MR=MC.
HOOK- reason is because of fixed costs, eventually get spread over quantity
FLATTEN line of MC- specialization
To find the price to mono comp go straight up from the MC=MR line to the demand line

MARGINAL Product per laborer- The difference between the total products made (40-20=20)
Marginal revenue- number given in the graph its $20, then the marginal product per laborer
(20x20=400)
 LABOR ECONOMICS

The marginal revenue product of labor (MRPL)

MORE employers want HIGH SKILLED workers

More DEMAND for high skilled

Less DEMAND for low skilled
More SUPPLY of low skilled
Less SUPPLY of high skill

A shift in the demand for the labor

A change in the price of other productive resources. If the price for using capital
decreases to the price of labour, labour will be replaced.
A change in worker productivity. As workers specialize and increase their productivity
and the MRPL is higher in general then more labor will be demanded. Perhaps better
training, more specialization, more capital can do this.

Wage
o Too low? No one works Shortage of workers.
o Wage too high? A surplus, quantity of labour exceeds quantity demanded.

Left is LESS
Right is MORE

Lots of people can flip burgers (more supply)

Lawyers doctors less people can do this meaning (less supply) - left

Regular demand for burger flippers (low demand) too many already

People want lawyers (high demand) shift right

Equilibrium is how much they will get paid

Reasons for supply/demand shifts in labour.

Supply
 Covid- down
 Elderly- up
  Advertising- up
Demand
 Technology- down

o Opportunity cost is what they can earn elsewhere.

o Specific skills needed can restrict others from offering their services. Doctor vs.
delivering newspapers.
o Geographic location. High pop. Density, not a high density.
o Jobs that become distasteful or unpleasant.
o Change in income tax rates.
o Changes in size and composition of population.