Transcript Revenue, Profits, and Economic Activity

Opportunity Cost Review
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Complete the activity sheet with your elbow partner.
Everyone must fill out their own sheet.
After the sheet is complete, on the back, write your
own Opportunity Cost Scenario for your partner to
answer.
I will choose 5 groups to share there scenarios with
the class. One person will read the scenario and
the other will give the answers.
Warm-up
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Define Economics.
Describe needs and wants.
List the four factors of production.
Give 5 examples for each factor of
production.
Which factor of production is the most
important? (trick question)
REVENUE, PROFITS, AND
ECONOMIC ACTIVITY
What is Revenue?
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Revenue is the amount of money received by a
company for goods or services sold during a certain
period of time
 Goods-
tangible items that are bought and consumed;
objects
 Examples-
food, clothing, tools
 Services-
something that someone does for you; hiring
people to perform work for you; actions
 Examples-
hair cut, car repair, doctor visit
Types of Revenue
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Total Revenue is number of
units sold multiplied by the
price per unit
 42
units of a product are sold at
$2 each, the total revenue is
$84
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Marginal Revenue is the extra
revenue that results from selling
one more unit of an output
Profit
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A company’s goal is to make as much profit as
possible
Profit is money a company has made after costs
have been deducted
Companies can increase profit by maximizing
efficiency in production. Often, by adding more
land, labor, or capital, companies can increase their
profit
Cost-Benefit Analysis
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Cost-Benefit Analysis- an
economic decision making
technique that tells us to
choose an action or make a
decision when the benefits are
greater than the costs
Marginal Benefits- the
additional satisfaction or
benefit when one more unit is
produced
Diminishing Marginal Benefit
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Diminishing Marginal Benefit- the point at which
producing more of the product or service is no
longer beneficial
 Example-
Say you have a test and you study for a few
hours. After a while you feel like you've covered
everything. At that point, there's only so much more
benefit you can get from studying more, so you're
experiencing diminishing marginal benefit. You
already know enough to get a 100, why study more?
P 508
Economic Activity
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Markets- a free and willing exchange
of goods and services between buyers
and sellers (not necessarily a place)
Factor Markets- markets where
productive resources are bought and
sold; products used for producing
Product Markets- markets where
producers offer goods and services to
the consumer