Chamberlain

Circular Flow Activity Directions Create two columns of words Organize the columns into “like” terms Businesses and Individuals/Consumers Think – what do these people provide? Once you have organized the terms – match the term to the term from the other column

Circular Flow of a Market Economy Businesses Individuals Supply Side Wages Interest Demand Side Goods and Services Supply Side Labor Capital (Investments) Demand Side Money – pay for good or service

Supply and Demand Supply: Amount of a good or service sellers are willing and able to offer at different prices Law of supply – As the price increases, suppliers will increase the supply of a product Maximize profits Demand: Amount of a good or service that buyers are willing to pay for a product Law of Demand – As the price increases, the demand will decrease

Market Price – The most efficient price at which buyers and sellers agree to do business – Equilibrium Too Much Demand, Too Little Supply – Shortage Too Little Demand, Too Much Supply - Surplus

Plotting Supply and Demand Selling Price of the dollNumber supplied per week per store Number requested per week per store $ $ $

Burger-Rama Dolls Selling PriceSupplyDemandResults $2.50A Shortage 150 $3.80B Surplus 140 FreeCOver 600 $ $3.15

Supply and Demand Joe sells baseball cards on the weekends. He is especially interested in Sammy Sosa cards. Here is his data from past weekends. Create a graph using the data. PriceSupply of cards Demand of cards $ $ $ $

Supply and Demand What is the market price (equilibrium)? How much would be demanded and supplied at $3.25 What are your results? How much would be supplied and demanded at $1.75 What are your results?

Brainstorm in your group why people start or stop buying a product besides just changes in price? Why would suppliers produce less or more of a project?

Why would the demand for a product increase or decrease? Change in taste United Colors of Benneton Substitutes – Competition Cheaper or better quality Number of consumers increases or decreases Complement – enjoyment of one is enhanced by the other Increase in demand of complement = increased demand Ice cream: price drops, whip cream sales increase Future price changes anticipated – weather or disaster Marketing – Young, old, cool, cutting edge

Why would the supply of a product increase or decrease? Cost of Inputs change Inputs – products/services used to make your product including labor, land, capital, marketing More firms/businesses enter the market Change in taste

Elasticity Relationship between the demand for a product and the change in price of a product Basically, if the price changes, how many people will stop buying the product? At what point will you see greater changes? Milk, Bread, Gas, and Toothpaste would be considered Inelastic IN the short run – 6 months to a year What products would you consider elastic? If a candy bar goes up in price a nickel, how many more people will not demand it?

Chapter 14 – Individual Assignments You choose the order you want to complete them INDIVIDUAL Work! Any sharing or copying and both parties will receive a Zero! I will come around and check off the work you complete daily – you are not handing this work in – Complete the work and staple it together as a study guide Section 2 and 3 questions – 20points Article : Outsourcing - 20 points Article: Get Healthy or Else – 20 Points Article: Walmart and Unions – 20 Points

3 types of Businesses Sole Proprietorship Partnership Corporations

Sole Proprietorship Who owns? 70% of all businesses are sole proprietorships Examples? Advantage? Disadvantage?

Partnership Who owns? Examples? Advantage? Disadvantage?

Corporation Responsible for 85% of all the products and services we use Very Large Business No specific owner Company is controlled by a board of directors who choose a CEO (Chief Executive Officer) to run the company People like you and me can invest in a company by buying stocks or shares of the company Company will share profits with stockholders

Franchise McDonalds: Sole Proprietorship and a Corporation – HOW? Individuals buy the rights to build a McDonalds from the corporation The individual has certain legal requirements that it must adhere to as far as McDonald’s Specials and Promotions Corporation makes money on the McDonald’s products that the individual buys – the better the restaurant is doing the better both the individual and corporation do

The Rights of Businesses “Get Healthy or Else” Should a company be able to fire an employee if they do not or can not quit smoking Matter of being business smart Companies pay millions in healthcare benefits The unhealthy cause the company’s insurance premiums to rise Is this infringing on a person’s personal life? Obama and Clinton have planned to fix our healthcare system to avoid issues like this. What do you think?

Labor US is losing its hold on the world as providing the most qualified/educated workers willing to work very hard for their money. Main issue – Labor competition overseas. “Outsourcing” What is outsourcing? Why is outsourcing good for US economy? Efficient Why is outsourcing bad for the US economy? China and India may overtake us on the long run

Compare the cost of labor You are providing a company a service when you agree to work for them…it just so happens that our labor is costing companies more and more each year. China, India and Mexico are the equivalent to Walmart for labor Accountant: US, $60,000.00India, $ Garment worker: US, $6-10 an hour China, $.25 Factory work: US, $15 an hourMexico, $2.00 Chip designer: US, $85,000.00India, $12, Financial Analyst: US, $85,000.00India, $12,000.00

In Defense of Labor 1800’s – US Industrial Revolution Machines increase speed of production Masses head to cities for jobs in factories Rise in wage labor hour days – 7 days a week Dirty, Dangerous and Paid little Leads to rise in Labor Unions Organization of workers Goal is to improve working conditions, wages and workers’ rights

Company and Union Tactics Strike Boycott Slowdown Sit-in Demonstrate Scabs Hired Security Lock out Yellow dog contracts Black listed

Compromise Collective Bargaining Process by which unions and businesses reach agreements Give and Take Today – Union membership is falling Not as powerful Outsourcing Americans want cheap goods – Walmart Many people look down on unions – cause wages to skyrocket, which causes the price of goods to increase

Walmart Provides a model to the rest of the businesses in the US Do not compromise with or allow unions in your store Shut down the meat department in Texas 2007 revenue = $378 Billion Make workers sign yellow dog contracts Give workers tests to find indications of union sympathizers Break laws but it is cheaper to pay fines then give workers benefits or allow unions