Introduction to Economics 5 Capitalism Defined. Warm Up Use the first 15 minutes of class to produce your goods. NEWS FLASH There is a gas shortage, therefore.

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Presentation transcript:

Introduction to Economics 5 Capitalism Defined

Warm Up Use the first 15 minutes of class to produce your goods. NEWS FLASH There is a gas shortage, therefore all variable costs are increased by $10. You must also create a sign for your store (make sure it includes your logo). You may use left over materials from your clothing or you can buy new paper to create your sign on.

Goods Physical Capital- Human-made objects used to create other goods and services. E.g. factory building, specialty machinery, etc… Can save companies time and money in the production process.

Producer Price Index PPI- indicator that determines the health of the nation’s economy that judges the price of materials vs. the price of finished goods from year to year.

Output versus Input Output- the level of production; is most profitable when price is equal to marginal cost. Input- Any change in the cost of an input such as the raw materials, machinery, or labor used to produce a good, will affect supply.

Marketplace Keep track of receipts in log books for producer First 5 minutes-1st person shops, other man’s shop 2 minutes-adjust prices 5 minutes-2nd person shops Add up receipts DateProduct/ Purchase BusinessAmount +/- Authorization/ Signature Balance

Warm Up: The Market Copy and Answer: Evaluate the market. As a consumer: What items did you buy? Were they affordable? Too cheap? Too expensive? Was anything missing? As a producer: Did you have enough to sell? Why or why not?

Law of Diminishing Return When one of the factors of production is fixed in supply, additions of other factors will lead to an increase in returns up to a point, but beyond this point returns will diminish.

Increasing returns Recycling When a producer can reuse a material in a new way this will increase the output vs. input ratio.

Increasing returns Education and training When your employees are better trained in their field/specialization they will be able to be more productive. If they can have the knowledge to solve problems on their own, they keep work stoppage to a minimum.

Investing in your Company Take into account new investments, purchase them and get: Education $50- 6 free sheets of white paper/3 colored /2 printed paper or fabric Recycling $75- materials ½ off