Business Economics The Bear Necessities

Fixed and Variable costs Electricity Rent VAT (after sales tax) Cotton Council tax Wages of workers Catering costs Thread Computer systems Insurance Advertising Workers health benefits Water Dyes Add three other things to each column.

Fixed / Variable? Are wages really a variable cost? Explain why? What are the different types of contracts that workers can be given and why do they vary?

Fixed Salaries Workers on this type of contract will work a set number of hours per week. Their wage will not change depending upon their productivity. They will have set responsibilities. These workers can be full or part time. Common examples of workers which would have this type of contract would be librarians, office workers, guards, teachers, doctors.

Hourly rate These workers wages will vary depending on the number of hours they work. This type of contract is common with low skilled jobs with relatively low returns Examples of this type of job would be shop assistants, waiters, labourers, bar workers, agricultural workers. Many young workers with part time jobs would take this type of contract. Their wages may be ‘topped up’ with tips

Salary + Bonuses This is one of the most common types of contract. The salary gives workers the security of knowing they are guaranteed a certain standard of living but are motivated to work harder with the prospect of bonuses to top up their wages. Bonuses can be given for achieving a set of targets related to production levels or quality of service given. In certain industries, ie finance, bonuses often form the main part of the take home wage. Health and insurance benefits are usually included. Extra benefits are common such as housing and cars with expat workers. A huge range of industries in the private sector offer these contracts from insurance companies, banks, food producers, consumer durables, brokers…

Individual contracts This is becoming common in the private sector. Often highly skilled workers will be paid a daily wage or a lump sum on completion of a short project that workers within the company do not have the expertize to complete. These contracts can be highly lucrative. Examples of professionals who are given these types of contracts are; IT specialists, architects, marketing professionals, graphic designers or business consultants

Task You have 7 minutes to turn this information into a diagram.

Key terms for your glossary Fixed costs Variable costs Total costs Total revenue Average revenue Turnover Break even point Profit/loss margin

1. Fixed costs are those which do not vary with the amount produced ie rent 2.200 3.200 4. Variable costs are those which change with the amount produced 5. 800 6. 8000 7. a) 1000 b) 8200

Bears produced Fixed costs Variable costs Total costs Average costs 200 50 400 600 12 100 800 1000 10 200 1600 1800 9 300 2400 2600 8.67 400 3200 3400 8.5 500 4000 4200 8.4 600 200 4800 5000 8.3 700 5600 5800 8.28 800 6400 6600 8.25 900 7200 7400 8.22 1000 200 8000 8200 8.2

10. 10 11. Average revenue = Total revenue Number of bears sold 12. 1000 13. 10000 14. Complete table 16. TR-TC 17. Total cost Number produced

Now your task is to create a new section in your glossaries called ‘Business Economics’. Enter in all the new terms with their definitions.

Task Complete the following task in Chapter 18 on paper.