Test 1 – Next Week – 1p.m.

20 - 25 = 20 minutes
4 SAQs x 5-7 minutes = 25 minutes
Check your work = 5 minutes

We hope to have tests graded by Monday

We hope to publish grades next Tuesday
 Test 1 – Next Week
Quercus software will grade MCQs
Course TAs will grade 4 SAQs

We hope to have tests graded by Monday

We hope to publish grades next Tuesday
Test is Published on Quercus
Test can be found in “Quizzes” section of
MGTA05 Quercus site

Test can be seen from 1:05 p.m. next week

Reviewing / Discussing Your Test
You are entitled to see your test
You will be given
answer key and marking guide
You will be able to discuss you test with
MGTA05 course TAs who graded it
There is a re-grading / appeals process

TA Office Hours announced next week

MGTA05 – Foundations

Economic Systems
Who controls the
factors of production?
Please read Chapter 4
to p. 77
Last updated: Sept 27, 2021
 Review: Factors of Production

A business is made from basic elements:

Natural Resources
Labour
Capital
These are organised and assembled by:
Entrepreneurs
6
 Review: Factors of Production

If you understand the parts,

you will better understand the whole

Quantity, quality, and cost of factors

+ appropriate use of the factors determines
quality, quantity and cost of products

(a hockey coach knows that)

7
 MGTA05 – Foundations
Today:

Economic Systems Explained

Four Types of Economic System

communism socialism mixed market pure capitalism

Canada’s Economic System

8
 Economics
The study of how people produce the
things they need and want
What to produce
What to consume
How to produce it
How to share it
 Economic Systems
What to produce?
What to consume?
How to produce it?
How to share it?

“Economic system”
the system that a country uses
to answer these questions
 Economic Systems
Different countries answer these
questions differently:

some have others have

government individuals
in control in control
(in most countries govt. and individuals share responsibility)
 Economic Systems
All or mostly All or mostly
government individuals
in control in control

we call we call
Planned Market
systems systems
 Terminology
state: a country, its people and its territory
Canada is a “state”
A “state” is lasting
Canada more than 150 years old

government: the people who run the state

Governments are temporary
Governments change
(Liberal government, under Trudeau since 2015)
Planned Economies: Advantage

Only the state:

has the power and resources to
direct food, clothing, shelter, jobs
to benefit all society

Only the state:

has concern for all citizens
Planned Economies: Advantage

Only the state will ensure fair

distribution of goods and services
to all citizens

Planners working for government will

make rational decisions in best
interests of all the nation
 Planned Economies - 2 Types
Communism:
Government owns/controls all the factors of
production makes 100% of economic decisions.
Examples: very few, maybe North Korea?

Socialism:
Government owns/controls majority of the factors
of production, including principal industries, makes
most of economic decisions.
Example: Cuba… but that’s changing
 Economic Systems
Planned
government
owns/controls
100% of factors
more government less government

communism
 Economic Systems
Planned
government
owns/controls
most of factors
more government less government

socialism
 Market economies: Advantage
Individual business owners are
closer to their customers than
government planners

Individual business owners have more

current and better information, about
what people in their towns actually need
Market economies: Advantage
Individual business owners can
respond quickly to better satisfy
people’s needs

Government control concentrates

power and power corrupts
 Market Economies - 2 Types
Pure Capitalism:
Individuals owns/control all factors of production
Individuals make 100% of economic decisions
Examples: none

Mixed Market:
Individuals own/controls majority of factors
Individuals make most of economic decisions
Governments regulate and tax, run some business
Example: Canada, USA, UK, France
 Economic Systems
Market
individuals
own/control
100% of factors
more government less government

pure
capitalism
 Economic Systems
Market
individuals
own/control
most of factors
more government less government

mixed market
 Economic Systems

Planned Market

more government less government

Pure
Communism Socialism Mixed Capitalism
 Canada: Mixed Market System

In Canada:
Businesses and government co-exist
Businesses provide most products
(e.g. Loblaw’s sells groceries, Rexall sells drugs)

Not for profits provide some

(e.g. charities run food banks)

Government provides some others

(Canada Post delivers mail, LCBO sells wine)
 Economic Systems

Planned Market
Pure
Communism Socialism Mixed Capitalism

more government less government

Canada is (roughly) here on this spectrum