1. Entrepreneurship
Supply and Demand
Warm Up – Read pp

2. Entrepreneurship
Supply and Demand
Presented By
Mrs. Bowden

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

4. 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

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

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

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

8. 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

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

10. 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

11. Chapter 2

12. Chapter 2

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

14. Chapter 2

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

16. 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

17. 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

18. 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

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

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

21. 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

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

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

24. 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)

25. 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

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