Unit 1 Key Questions

Question 1:
a) Tony was satisfying his need for food by going to What a Bagel because he
needed to eat breakfast.
Tony was satisfying his want for his favourite choice of cinnamon raisin
bagels by going to What a Bagel.
b) Price factors affecting demand
The price of related or substitute goods was one factor that influenced the
demand for What a Bagel products since its prices were considerably
lower than those at some other places.
Non-price factor affecting demand
Advertising was a factor that influenced the demand for What a Bagel
products such that Tony immediately thought of What a Bagel when he
wanted to go have breakfast.
Price factors affecting supply
The predicted increase in the price of coffee beans meant that the
restaurants supply of coffee beans for their coffee was much less
therefore they had to increase their prices to meet the cost.
Non-price factors affecting supply
Shortage or delay from supplier of the cinnamon raisin bagels affected
What a Bagels supply of the bagels to its customers hence customers
went for the substitutes.
c)

I) Tim Hortons
Dunkin Donuts
ii) Tony could have made himself breakfast at home

Question 2:
a) Profit focused business
b) Sole proprietorship
c) Advantage: Sayeeda gets to keep all the profits from her business to
herself unlike other forms of ownership.
Disadvantage: This form of ownership makes Sayeeda liable for any
liability that might occur in the running of her business. She can be sued
and loose her business.
d) Profit focused business
e) Corporation

f) Advantage: Once incorporated, the firm remains in existence even if

Pierre dies. This is beneficial since Pierres family can still benefit from his
investment.
Disadvantage: Suppliers may fear to lend to the corporation on credit
since it would not be able to recover the debt if the corporation went
bankrupt since there is no one liable except the corporation.
g) Sayeeda chose this type of business because the start-up costs, level of
risk, complexity of the business operations and resource requirements are
low. Also, financing the business and availability of skills are easy and the
business is fun for her.
h) Pierre chose this type of business because it has the prospect of giving
high profits once it is stable hence a significant reduction of risk. The fact
that he contributed half of the capital gives him half the control of the
business hence he will receive more of the profits.
Question 3:
a) I) Sexual harassment: Respect
ii) Accounting fraud: Honesty
iii) Unethical discrimination: Fairness
iv) Pollution: Respect
v) Insider trading: Honesty
vi) Whistle blowing: Respect
vii) Unethical working conditions: Fairness
viii) Misleading advertising: Respect and Fairness
ix) Ethical responsibility: Respect
x) Unethical pressure sales: Respect
b) The Issue:
A 50 kilometre major highway commissioned to be constructed over a
period of 3 years has been linked with possible negative and positive
effects. Traffic disruption is a major issue for commuters and car owners
going to work in the Central Business District as roads are diverted
everyday without notice causing confusion on the road. The roads being
used at the moment are in pretty bad condition and the diversions are
worse causing damage and losses in terms of mechanical car trouble for
many motorists.
The construction requires new planning of water pipes and sewerage
systems and therefore, residents close to this highway will experience long
periods without water for their homes. Research conducted along the
highway showed increased levels of respiratory diseases in addition to

other health complications. The increase in dust levels has affected the air
quality in the area, giving rise to many respiratory problems. In addition,
contractors are using fresh water to soak some of the dust during
construction, further reducing the water available for domestic use. Some
of the liquid waste generated by the construction is also finding its way
into domestic water sources.
There have also been complains of increasing noise levels and vibrations
that have resulted in some house walls cracking. Many are being affected
by aesthetic pollution caused by the modern mode of construction used on
the road.
As much as the residents welcome the new road, the social disruptions
this project has caused have come to the fore. Traffic issues
notwithstanding, the skyrocketing property values along the new road are
threatening food security in an area whose residents rely on subsistence
farming for sustenance. The project was envisioned because of an existing
need to make travel to the central and northern part of Kenya faster. Now
Kenyans must choose between having a good sleep and improving the
economy. The project, however, will make our lives better in the long run.
Possible solutions:
The government should intervene and make sure the contractors work in a
sustainable way so as not to produce negative effects on the residents.
The contractors should come up with better ways of dealing with waste
and inconveniences caused as a result of the ongoing important project.
Question 4:
a) I have access to a jam that the Canadian consumer likes and is willing to
pay the extra price for. This is good for business since I am making profits.
The jam manufacturer now has access to another market for his product
as a result of this trade arrangement.
b) The jam manufacturer may be having a bad environmental impact as it
produces the raspberry jam by degrading water or land.
c) i) An increase in ocean freight rates by 4% may result in the cost of
importing the jam more expensive and therefore would lead to the price
charged to consumers going up. Demand for the jam would most likely fall
significantly.
ii) The signing of a free trade agreement between Canada and Australia
would make the cost of importing the jam lower hence the jam can also be
sold at a cheaper price to the Canadian consumer. Demand would
therefore increase.
iii) A fall in the value of the Canadian dollar against the Australian dollar
means that it would require me as the importer to have more Canadian

dollars to import the same value of jam than before. This would result in
the cost of importing the jam to increase hence an increase in the prices I
charge the Canadian consumer. Demand would therefore fall.
iv) The drought would make the supply of raspberry to fall and therefore
the production of jam would fall causing a shortage in the market and
subsequently, the manufacturer would have to charge a higher price for
the jam to cover the loss. As a result, the price of the jam would be high
and the demand would fall.
d) Gift giving: It is not a good idea to bring a gift in a business meeting in
the Australian culture. This is frowned upon.
Business Attire: Men should wear dark suits, a shirt and a tie while
women should wear dresses or jacket, skirt and blouse and no slacks.
Punctuality: It is very important for those attending the meeting to arrive
on time as punctuality is very critical in Australian culture.
Protocol in business meetings: You can start off with a joke in the
meeting to break the ice. Australians are very relaxed in meetings.
However, it is important that you be direct and get to the point of the
purpose of the meeting.
Gender roles: Australian culture is still dominated by the male gender so
it is recommended that the male members of your group do most of the
talking especially the key issues to be discussed.
Question 5:
a) i) NAFTA: North American Free Trade Agreement it consists of Canadas
major trading partners, United States and Mexico. This agreement has
created more than a million jobs in Canada.
ii) ECTI: EU-Canada Trade Initiative the third largest export market for
Canada is a member of the EU, United Kingdom. This initiative may result
in visa-free movement between the EU and Canada and that will make it
easy for Canadian investors having access to international markets to do
business.
iii) APEC: Asia-Pacific Economic Cooperation These are countries that
contribute to 70% of global economic growth. With reduced tariffs and the
elimination of trade barriers benefits Canada because it can access the
best markets in the world.
iv) FTAA: Free Trade Area of the Americas It involves the unification of all
nations of the North and South America in free trade. Canada would now
have access to products such as coffee beans and cane sugar that it does
not have and would also add on to its export market.
b) NAFTA: Canada imports colour televisions and exports wheat.

ECTI: Canada imports crude oil and exports diamonds.

APEC: Canada imports video games and exports lumber.
FTAA: Canada imports coffee beans and exports sulphur.