Transcript How well do you know Economics?

How well do you
know Economics?
Name the four factors of
production.
• Land
• Labor
• Capital
• Entrepreneurship
Define each factor of
production.
• Land –
natural resources (things like trees, seeds,
animals, water, grass)
• Labor –
Workers, manual labor
• Capital –
equipment or anything you need to run a
business or to do a job
• Entrepreneurship –
the skill and initiative of the person who
starts and manages a business.
Quality
Company A
Top Quality
Company B
Lesser Quality
Durability
Long Lasting
Wear out
quickly
Celebrity
endorsement
Pro basketball No autograph
star autographs
every ball
$95
$15
Cost
1. Which ball would you like to buy? Why?
2. Which company will probably sell more balls?
Probably company B, since their product is less expensive and can be afforded by
more families.
3. Which company makes more money?
We can’t tell from this chart.
Quality
Durability
Celebrity
endorsement
Cost
Company A
Top Quality
Long Lasting
Company B
Lesser Quality
Wear out
quickly
No autograph
Pro basketball
star autographs
every ball
$95
$15
What would happen if:
1. Company A sold their ball for $15?
More sales for Company A; Company B might have to drop their price or go
out of business.
2. Company B got the top pro player to autograph each ball sold?
More sales for Company B.
Define Consumer.
A person who buys or uses a good or service.
Define producer.
A person who makes something, especially
something for sale.
How is labor a factor of
production in these
businesses?
• A fast food restaurant?
Workers are needed to cook food and serve
customers.
• A software company?
Workers plan software, develop it for the computer
and sell it.
• A veterinary clinic?
Veterinarians, technicians, and office assistants are all
needed to help the animals.
How is entrepreneurship
a factor of production in
the same 3 businesses?
• A fast food restaurant?
• A software company?
• A veterinary clinic?
In each case someone thought of the business and he or she
invested their time and money to start the business in an
attempt to make a profit. The owner or a manager continues
to build the company.
How is land a factor of
production in:
• Farming.
• Automotive production.
• Mining.
• Farming requires fertile land with sufficient rainfall for crops.
• An automotive factory requires several acres of land. It should be
located near a supply of workers and good transportation.
• Mining requires an area rich in minerals.
How is capital a factor of
production in:
• Farming.
• Automotive production.
• Mining.
• Farming - Money is needed for seeds, animals, and equipment.
• Automotive production - The building, tools, and machines are
part of the capital requirements of a factory.
• Mining - Mining equipment is the capital requirement.
What economic reasons
bring people to cities?
• Jobs tend to be more plentiful and higher
paying.
• Markets have more selection and lower prices.
(housing, land)
What is the largest
industry in Ohio?
Agriculture: there are many reasons, but
favorable climate and land have built and
important tradition of agriculture in Ohio.
Why might the U.S. trade
food for oil from Kuwait?
The U.S. produces more food than the people of
the U.S. use, but it does not produce enough
oil to meet demand. Kuwait is in the opposite
situation. The two nations trade to meet the
needs of their citizens.
When the U.S. brings in oil from
Kuwait, what happens to:
supply
demand
price for oil
• Supply – goes up
• Demand – may increase slightly (due to lower prices)
• Price for oil – goes down
What are the advantages
of economic competition?
• Variety of products
• Lower prices
• Raises quality
• Bigger selection
What are the disadvantages
of economic competition?
• Forces some companies to fail.
• Encourages aggressive business practices.
• Is sometimes based on wrong factors (advertising, etc.)
There has been only one
restaurant in town for many
years. People say the prices
are high, but they eat there
anyway. A new fast food
restaurant comes to town. How
does this change affect:
• Supply
Greater supply of restaurant food.
• Demand
Demand will probably go up with more choices and lower prices.
• Price
Prices will likely go down.
What can the old
restaurant do to stay in
business?
• Lower price
• Raise quality
• Increase advertising
• Add another, different item to the menu
Think of a product you
bought. How did each of
the following factors
influence your decision to
buy it?
•
•
•
•
Price
Quality
Advertising
Did you need or want this product?
Would a consumer be more
or less likely to buy a
product if:
•
•
•
•
Price went down. More likely
Quality went up. More likely
Price went up and quality went down. Less likely
Price stayed the same, quality went up. More likely
Company A
Green Soccer Shoes Sales Figures
Company B
# of
pairs
3000
2000
1000
1999
1999
2000
2000
2001
2001
Only one company made green soccer shoes
in 1999. Which company? How many pairs
did it sell?
Company A – 3000 pairs.
Company A
Green Soccer Shoes Sales Figures
Company B
# of pairs
3000
2000
1000
1999
1999
2000
2000
2001
2001
In 2000, a competitor began selling green
soccer shoes. What happened to Company
A’s sales?
Sales went down.
Company A
Green Soccer Shoes Sales Figures
Company B
# of pairs
3000
2000
1000
1999
1999
2000
2000
2001
How could Company A sell more shoes
again?
Lower price, raise quality, develop a new product.
2001