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

Corporation

legal entities that are seperate and distinct from its owners

Sole proprietorship

a single owner that's fully responsible for everything

Partnership

non-incorporated businesses created by 2 or more people

Crown corporation

owned by federal, provincial, municipal organizations

Franchise

get a license to allow them to have access to business's proprietary knowledge

Cooperative

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)

Stakeholder

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

Efficiency

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

Oligopoly

A market structure characterized by a few large firms selling an identical or diferentiated product. Each with some substantial control over price.

Monopoly

Market dominated by a single firm allowing it to set a profit max price

Collusion

illegal agreement among competiting firms to set prices, limit output or reduce or eliminate competition

Privatization

The sale of public assests in a government entriprise to private firms

Deregulation

The opening of the market to more competition by eliminating government regulations put in place to limit competition

Productivity

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

Mediation

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

Strike

Temporary work stoppage by employees, designed to force an employer to meet the union’s contractual demands

Lockout

Occurs when an employer shuts down the place of employment in order to force workers to accept its contract offers