Unit Two: Firms, Markets, and Economic Stakeholders Definitions Review

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legal entities that are seperate and distinct from its owners
Sole proprietorship
a single owner that's fully responsible for everything
non-incorporated businesses created by 2 or more people
Crown corporation
owned by federal, provincial, municipal organizations
get a license to allow them to have access to business's proprietary knowledge
A business owned equally by it members who have a common relationship , goals or economic purpose
Not for profit
business that provide products /services without making profit (they are dedicated to improve community)
party that has interest in a company & can be affected/affect business (investors, employees, customers, suppliers)
The underground economy
activity that is unreported / under-reported for tax or HST-purposes
The sharing economy
economic system where assets/services are shared between private individuals for free of for a fee by internet (interactions on online platform)
Real Gross Domestic Product (GDP)
The total value of all goods and servicews produced in Canada in a give year adjued by price changes also called constant dollars GDp~P.
Accounting profit
the excess of a firms revenue over costs
The theory of the firm
Relationship that exists between a firms revenue, cost and profits
Total revenue
The price of a product multipled by the quantity demanded of the product Equation: total profit = (price x quantity sold)
Total costs
The total of a firms fixed an total costs which includes all teh pruchases made by a firms productive resources it needs to produce its good or service equation: fc+vc
Fixed Costs
Costs that are constant
Variable Costs
An expense that changes
Theory of the firm equation
Equation: total profit = total revenue - total costs
The short run
period of time over which the firm’s maximum capacity becomes fixed because of the shortage of at least one resource
The long run
period of time in which the firm can adjust both its fixed and variable costs to increase its max capacity
Marginal revenue
The additional revenue gained for producing one more unit of its product
Marginal costs
The additional cost gained for producing one more unit of its product
Marginal analysis
Examination of associated cost & potential benefit for specific business activities/financial decision - see if lust cost for activity change will result in benefit for them
producing at lowest possible cost
Unit labour cost
Measures firm's efficency, obtained by dividing its total labour costs by the number of units it produces.
Labour intensive
Industry in which labour rather than machinery. dominttes the production process
Cottage system
People working in small shops or in their homes
Capital intensive
Production in which machinery rather than labour dominates teh process, characteristic of the factory system
Economies of scale
Refers to the greater efficiency that some firms can achieve when they produce a very large amount of output
Perfect competition
Many producers and a uniform product
Monopolistic competition
Many small to medium-sized firms sell a differentiated product, each having some control over price
A market structure characterized by a few large firms selling an identical or diferentiated product. Each with some substantial control over price.
Market dominated by a single firm allowing it to set a profit max price
illegal agreement among competiting firms to set prices, limit output or reduce or eliminate competition
The sale of public assests in a government entriprise to private firms
The opening of the market to more competition by eliminating government regulations put in place to limit competition
A firm's ability to maximum outputs from resources available usually measured as a firm's output/ worker
Marginal product
the additional output that is created by an additional unit of labour
Marginal revenue product of labour (MRPL)
the amount of additional revenue that is generated for a firm as a result of adding one more worker to the production process
Wage differentials
are the differences in wage rates among different labour market
Labour union
Organization of workers that collectively promotes the interest of its members and negotiates with their employers
Trade union
Represent workers in a single occupation regardless of where they work
Closed Shop
The employer may only hire workers who are already members of the union
Open Shop
Union membership is voluntary, Right to Work, don't pay union dues but still enjoys benefits, no membership (employer sets terms of employment)
The Rand formula
Canadian labour law requiring workers covered by collective bargaining contracts to pay union dues — whether or not those workers are union members, all workers in workplace must pay union dues even if they aren't apart of union
When a third party is brought in to study the situation and suggest possible ways to reach an agreement, helping both parties to find some middle ground
Voluntary arbitration
Both parties agree to have a third party who acts as a judge, make a decision about which position is more fair & reasonable, arbitration is choosing one over the other
Forced arbitration
The government orders two parties to submit their disputes to an arbitrator. Sometimes taken when a strike would be so disruptive to the general public that the government considered it undesirable
Temporary work stoppage by employees, designed to force an employer to meet the union’s contractual demands
Occurs when an employer shuts down the place of employment in order to force workers to accept its contract offers