Transcript Sally Sold Seashells By The Seashore

Sally Sold Seashells By The Seashore
An Introduction to Economics
Sally started his own business.
• Entrepreneur
– Creation
– Organization
– Risks
– Responsibilities
Sally’s Seashell Store competed
against a similar business named
Oliver’s Ocean Originals.
• Free Enterpise System
– Motivated by Profit (money kept after
expenses)
– Competition Helps the Consumer
– Monopoly, Oligopoly, Perfect Competition
Sally sold collected shells and
also offered a guided tour to
collect your own shells.
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Goods – tangible or physical products
Services – intangible products
Need – required for survival
Want – like to have
Sally’s store was a small shack on the beach
with tables and bookcases. He hired two
kids to collect shells. He also developed a
way to locate quality seashells.
• Factors of Production
– Land
– Labor
– Capital
– Entrepreneurship
During tourist season, Sally sells seashells
for $2.00 each. He tried to sell them for
$3.00, but sales plummeted.
• Scarcity – allocation of limited resources for
unlimited wants
• Demand – the quantity of goods a consumer is
willing and able to buy
• Elastic Demand – a change in price creates a
change in demand
• Inelastic Demand – a change in price has little
effect on the demand for a product
Sally has noticed that he rarely
has repeat customers.
• Diminishing Marginal Utility – people will not
buy more than they can reasonably use,
regardless of price
Sally has seen prices rise during hurricane
season when shells are hard to find. He
also saw prices drop when a competitor
imported shells from the Pacific ocean.
• Supply – the amount of a good that producers
are willing to provide
• Surplus – more supply than needed
• Shortage – less supply than needed
• Equilibrium – where demand and supply meet
I don’t know how this applies to Sally.
• Gross Domestic Product (GDP) – total market
value of goods and services produced
nationwide during a given period of time
• Federal Reserve – government agency
regulating lending to stimulate the economy
• Business Cycle – periodic pattern of expansion
and contraction the economy goes through
• Inflation – a jump in prices that slow
consumer spending
• Recession – slowing of spending; the Fed
lowers the interest rate to promote spending