1. HI FRIDA Y

2. HAPPY MONDAY

3. SUPPLY SupplySupply is the amount of goods available Quantity suppliedQuantity supplied – how much of a good is offered for sale at a specific price

4. Law of Supply Law of supplyLaw of supply – the higher the price, the larger the quantity produced –As the price of a good rises, existing firms will produce more in order to earn additional revenue. –At the same time, new firms will have an incentive to enter the market to earn a profit for themselves 2 movements combine to create the law of supply2 movements combine to create the law of supply –1. individual firms change their level of production (more or less) –2. firms entering or exiting the market

5. Law of Supply PRICE As price increases… SUPPLY Quantity supplied increases SUPPLY Quantity supplied falls PRICE As price falls… Higher prices lead to more production!!!

6. Supply Schedule Shows the relationship between price and quantity supplied for a specific goodShows the relationship between price and quantity supplied for a specific good Lists supply for a very specific set of conditions (all other factors remain constant except price)Lists supply for a very specific set of conditions (all other factors remain constant except price) Rise or fall in price will change the quantity suppliedRise or fall in price will change the quantity supplied

7. Supply Graph Supply curveSupply curve – a graph of the supply schedule Higher price = Higher output

8. Role of Existing and New Firms Existing: (firms want to produce & sell more if they will earn more)Existing: If a firm is already earning a profit by selling a good, then an increase in the price (ceteris paribus) will increase the firm’s profits. (firms want to produce & sell more if they will earn more) New:New: Rising prices draw new firms into a market and add to the quantity supplied of the good.

9. Elasticity of Supply The way suppliers respond to price changes What determines whether the supply of a good will be elastic or inelastic? –TIME!!! inelasticIn the short run, a firm cannot easily change its output level, so supply is inelastic elastic.In the long run, firms are more flexible, so supply in more elastic.

10. Combining Supply & Demand

11. THE STANDARD: SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy. a. Define the Law of Supply and the Law of Demand.a. Define the Law of Supply and the Law of Demand. b. Describe the role of buyers and sellers in determining market clearing price.b. Describe the role of buyers and sellers in determining market clearing price. c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.c. Illustrate on a graph how supply and demand determine equilibrium price and quantity. d. Explain how prices serve as incentives in a market economy.d. Explain how prices serve as incentives in a market economy. SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.SSEMI3 The student will explain how markets, prices, and competition influence economic behavior. a. Identify and illustrate on a graph factors that cause changes in market supply and demand.a. Identify and illustrate on a graph factors that cause changes in market supply and demand. b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages.b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages.

12. Happy Tuesday

13. Supply & Demand Schedule Shows the # that consumers will buy at each price and the # producers are willing to supply at each price Supply and Demand Together at Last Price of Widgets # of Widgets demanded # of Widgets for sale $1.0010010 $2.009040 $3.007070 $4.0040140

14. Equilibrium The point of balance between the price and quantity Where the market for a good is stable Market equilibrium Market equilibrium = where quantity supplied equals quantity demanded Where the supply curve and the demand curve intersect

15. Disequilibrium If the market price or quantity supplied is anywhere but at the equilibrium Occurs when quantity supplied is not equal to quantity demanded Outcomes of disequilibrium: – Excess demand – Excess demand (shortage) – Excess supply – Excess supply (surplus)

25. Market Price & Equilibrium Market forces will push the market toward the equilibrium Market forces will push the market toward the equilibrium Sellers don’t want to waste their resources on excess supply and when there is excess demand, profit seeking sellers realize they can raise prices to increase profits

26. Excess Demand When quantity demanded is more than quantity supplied Occurs when the actual price is below the equilibrium price A low price encourages buyers but discourages sellers Suppliers will keep raising prices as long as there is an excess demand, and the quantity demanded exceeds quantity supplied

27. Excess Supply If the price is too high When quantity supplied exceeds quantity demanded High prices encourage sellers but not buyers THINK: TOO MUCH!

28. Government Intervention The government controls prices in 2 ways: –Price ceilings –Price floors

29. Price Ceiling A maximum price, set by the law, that sellers can charge for a good or service Government imposes price ceilings on “essential” goods EX: Rent control – government sets rent below the equilibrium price EX: Rent control – government sets rent below the equilibrium price –Increases quantity demanded but decreases quantity supplied –Landlords have difficulty earning profits from low rents –New apartments wont be built and suppliers will leave the market causing excess demand (shortage)

30. Price Floor Minimum price set by the government that must be paid for a good or service Imposed when the government wants sellers to receive some minimum reward for their efforts The government might provide financial assistance to producers instead of using price floors (like emergency aid to farmers) The government might provide financial assistance to producers instead of using price floors (like emergency aid to farmers)

31. Minimum Wage price floorExample of a price floor Sets a minimum price an employer can pay a worker for an hour of labor labor surplusThis causes a labor surplus – more people looking for work than the employees want to hire

35. IT’S THURSDAY

36. Welcome to Tuesday!

37. ECONOMIC$ $TANDARD: SSEMI4 The student will explain the organization and role of business and analyze the four types of market structures in the U.S. economy. SSEMI4 The student will explain the organization and role of business and analyze the four types of market structures in the U.S. economy. a. Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation. a. Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation. b. Explain the role of profit as an incentive for entrepreneurs. b. Explain the role of profit as an incentive for entrepreneurs. c. Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition. c. Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition.

38. Marginal Product of Labor The change in output from hiring one more worker Measures the change in output at the margin, where the last worker has been hired or fired 3 workers can make 5 pizzas per hour Adding another worker increasing production to 7 pizzas per hour. What is the marginal product of labor for the 4 th worker?

39. Increasing Marginal Returns Specialization increases output per worker If each person can specialize in a task, they won’t waste time switching from tasks, which will allow them to become more skillful at their assigned task Therefore, each worker can produce more

40. Diminishing Marginal Returns When adding more workers increases total output, but at a decreasing rate Producing less and less output from each additional unit of labor added to the mix This is a result of limited capital

41. # of workersBeanbags per hourMarginal product of labor 00- 144 2106 3177 4236 5285 6313 7321 831

42. Production Costs Fixed Cost – does not change no matter how much is produced; ex: rent, machinery, etc Variable Cost – changes with production (direct relationship); ex: raw materials, some labor Total Cost – Fixed Cost + Variable Cost

43. Marginal Cost – the additional cost of producing one more unit Marginal revenue (price) = how much you would make off of selling one more unit of a good

44. How to Find the Best Level of Output Firm’s basic goal: maximize profit Profit = total revenue – total cost To have the biggest profit you would want a big difference b/t total revenue & total cost OR when

45. Assessment Explain whether each of these expenses of a textile mill is a fixed cost or a variable cost, and why. 1.Repairs to a leaking roof 2.Cotton 3.Food for the mill’s cafeteria 4.Night security guard 5.Electricity

46. Types of Business Organizations

47. The Purpose of a Business Organization A business is formed to carry on commercial enterprises and earn a profit. A business is formed to carry on commercial enterprises and earn a profit. The most common type of business is a sole proprietorship. The most common type of business is a sole proprietorship. A sole proprietorship is a business that is owned and managed by a single individual. A sole proprietorship is a business that is owned and managed by a single individual.

48. Sole Proprietorships This type of business makes up 75% of all businesses in the U.S. This type of business makes up 75% of all businesses in the U.S. They account for 6% of all sales. They account for 6% of all sales. Examples- Local bakery, bike- repair shop, hair salon, etc Examples- Local bakery, bike- repair shop, hair salon, etc.

49. Advantages of Sole Proprietorships Easy to start Easy to start a.Must obtain a business license b.Must find a place to conduct business. c.Must register a name Few govt. regulations Few govt. regulations ex. Health codes, zoning laws, etc. Owner receives all profits Owner receives all profits Owner has full control of all decisions Owner has full control of all decisions Easily makes changes Easily makes changes

50. Disadvantages of Sole Proprietorships Unlimited Personal Liability- owner legally responsible for all debts. Limited Access to Resources- Bank unwilling to lend money. All funds come from owner. Lack of Permanence- Sole proprietorships close when an owner dies, retires, loses interest, etc.

51. PARTNERSHIPS

52. TYPES OF PARTNERSHIPS GeneralLimitedLimited liability Most common Parents share responsibility Every partner is responsible for debts, losses Tradeoff= rewards Limited owners only invest money Not responsible for day to day operations Only can lose money that had been invested All partners are limited Not responsible for others’ mistakes Only certain businesses can be one: medical practices, legal offices and accounting firms

53. Corporations A corporation is a legal entity that is owned by stockholders A corporation is a legal entity that is owned by stockholders Stock is a certificate of ownership in the corporation. Stock is a certificate of ownership in the corporation. Corporations account Corporations account for 90% of all sales in the United States.

54. Types of Corporations Publicly Held Company Stock is bought and sold on the open market (stock exchange) Anyone with money can buy shares of these companies Example- The Home Depot 1.67 Billion shares of HD available

55. Types of Corporations Closely Held Corporation Also known as privately held companies Rarely trade stock, usually held by one family. Example- Publix Supermarkets Stock is only available to Publix employees.

56. Advantages of Incorporation Limited liability for owners Transferable ownership Ability to attract capital - Sell bonds Long life Ford incorporated in 1903

57. Disadvantages Expensive and difficult to start Expensive and difficult to start Double taxation Double taxation Potential loss of control for founder Potential loss of control for founder Many legal requirements and regulations Many legal requirements and regulations

68. WRAPPING IT UP… Page 136- ”The NBA Goes International”Page 136- ”The NBA Goes International” –Questions 1 & 2 Page 137-”Reviewing Key Concepts”Page 137-”Reviewing Key Concepts” –Questions 1-5 (Write the questions)