1. Free Enterprise System

2. Free Enterprise: You Have The Right to…
Own Property
Take Risk
Engage in competition
Make a profit
The government regulates business but does not determine its outcome.

3. Free Enterprise: You Have The Right to…
Copyright
Artwork, writing, music
Life of the author plus 70 years
Others must purchase a licensing agreement to reproduce the work

4. Example of Licensing
T shirt vendor must purchase a licensing agreement from NFL to print Falcons shirts.
It must share its profits
It must agree to terms and conditions to protect the NFL’s reputation!
NFL has control over all tam logos and how they are used.

5. Time to create something that can be copy written!
We will pretend that we are starting a T Shirt design business and wish to sell our shirts in the school store.  Step1: Create a shirt design in Illustrator ​Step 2: Discuss why it will be a popular item ​Step 3: Create a projected supply and demand curve for the shirt ​Step 4: Predict your Return on Investment and Break Even Point. ​Step 5: Place this info in a Power Point and briefly present it to the class

6. Supply and Demand

7. Things to consider when determining demand. List these for your shirt.
Awareness - Do people know about your product?
Promotions
Availability (Is the product availability to all?)
Ability to Use (knowledge & resources to make the product workable)
Benefit Deficiency (certain benefits are not relevant to a subset of customers)
What are the benefits of your product?
Affordability to your target market
How long does it take to make/replenish your product (Look up!)
What are your costs and sales price? (Look this up!)

8. Costs
Fixed – What you have to pay REGARDLESS of how many units you produce.
Rent, yearly salaries, etc.
Variable – Fluctuate with production. The more you product the more cost you assume.
Materials, gasoline, energy, hourly wages, etc.

9. Profitability ROI = Net profit/total investment
Break Even = Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs)
Every additional unit sold after this increases profit by the amount of the unit contribution margin, which is defined as the amount each unit contributes to covering fixed costs and increasing profits. This is defined as an equation as:
Unit Contribution Margin = Sales Price - Variable Costs

10. Break Even Example Rent = $100 a week. Shirts cost $6
Selling shirts at $20
What is your break even point for the month?
400/14 = 29 units

11. Supply and Demand
Law of Supply - All else equal, an increase in price results in an increase in quantity supplied.[1] In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.

12. Supply and Demand
Law of Demand - as the price of a good increases (↑), quantity demanded decreases (↓); conversely, as the price of a good decreases (↓), quantity demanded increases (↑)"

13. Supply and Demand