Entrepreneurship Supply and Demand Warm Up – Read pp30 - 33

Entrepreneurship Supply and Demand Presented By Mrs. Bowden

Today we will: Discuss selling products and services through traditional and non – traditional systems.

Functions of Business Production A profit is earned by selling products or services to consumers. The production function creates or obtains products or services. Chapter 2

Marketing The goal of marketing is to attract as many consumers as possible. The marketing mix includes: product distribution price promotion Chapter 2

Management The duties of management include: setting goals deciding on responses to competition solving problems managing employees evaluating business activities Chapter 2

Finance Financial duties include: determining capital requirements determining capital resources managing the financial aspects of the business Chapter 2

Lesson 2.3 What Affects Price? Goals Explain how supply and demand interact to determine price. Describe how costs of doing business affect the price of a good or service. Explain the effect of different market structures on price. Chapter 2

Terms supply demand equilibrium price and quantity fixed costs variable costs marginal benefit marginal cost Chapter 2

How Much Is Enough? supply demand how much of a good or service a producer is willing to produce at different prices demand an individual’s need or desire for a product or service at a given price Chapter 2

Chapter 2

Chapter 2

When Supply and Demand Meet equilibrium price and quantity the price at which supply equals demand Chapter 2

Chapter 2

What effect do supply and demand have on the price of a good or service? Chapter 2

Costs of Doing Business fixed costs (sunk costs) costs that must be paid regardless of how much of a good or service is produced variable costs costs that fluctuate depending on the quantity of the good or service produced Chapter 2

Fixed costs will be incurred regardless of the level of sales. Businesses with many fixed costs have a higher risk than businesses with mostly variable costs. Chapter 2

marginal benefit marginal cost measures the advantages of producing one additional unit of a good or service marginal cost measures the disadvantages of producing one additional unit of a good or service Chapter 2

How do the costs of doing business affect prices? Chapter 2

Supply and Demand Curves: What do the supply and demand curves look like for the following data? What is the equilibrium price?

Supply and Demand Curves: Quantity per week 5 10 15 20 25 30 35 Price per item $1 $5 $10 $15 $20 $25 $30 Demand Quantity per week 45 37 35 30 25 20 10 Price per item $5 $10 $15 $20 $25 $30 $40

Supply and Demand Curves: Complete item #8 on p. 38 Complete item #16 on p. 48. – graph AND answer the questions

Today we will: Discuss the economics of one unit of sale.

Subtract the expenses for one unit from its selling price. Economics of One Unit: Calculation of PROFIT for each unit of sale made by a business. Subtract the expenses for one unit from its selling price. Selling price – Expenses = Profit (or loss)

Economics of One Unit: An entrepreneur buys plain back packs, decorates them, and then sells them at a craft fair for $25 The expenses for each backpack are as follows – plain backpack $11, Supplies $ 3, and Labor$6 for a total of $ 20 Using the equation – Selling Price – Expenses = Profit we know that the profit for one bag is $5.00

Economics of One Unit: Complete item #17 on p. 48 and turn in before you leave class today.