1. Factors of Production
Businesses need four main things to PRODUCE an item that we WANT or NEED.
You have 20 minutes to create a foldable on the FACTORS OF PRODUCTION (p. 517)
You must include
• The four terms and their definitions
• An example of each term in the real world
•An image to go along with each example

2. Sort ‘em
Teachers * Tablecloth * ATMs * Wood * Tables * Shipping Containers* Restaurant Owner* Computers * Electricity * Truck driver * Assembly Line * Supervisor * Glass * Counselors * Superintendent * Dishwasher * Coal* Cash Register* Air* Copy machine* White Board* Napkins* Television * Factory * Sports fields * Uranium
Create chart with columns Land, Labor, Capital, Entrepreneurs
Put the following terms in the correct column

3. Fixed Costs
šFixed costs are the same no matter how much a business produces.
šExamples: property tax, mortgage payment

4. Variable Costs
šVariable costs are expenses that change with the number of items produced
šExamples: wages, raw materials

5. Revenue v. Profit
Revenue is like a business’ income. It is the money they earn from selling products.
Revenue – Costs = Profit
Goal of a business is to maximize profit.

6. Cost/Benefit Analysis
šA cost/benefit analysis is the act of weighing the costs and benefits of a decision. If the costs outweigh the benefits, you need to re-think your strategy.
šBusinesses use cost/benefit analyses to maximize profits

7. Circular Flow Notes
šThe circular flow diagram shows us how economic decision making in the market works
šMarket = place where goods and services are exchanged
šFactor Market = where Land, Labor, Capital, Entrepreneurship (LLCP) are sold
šHouseholds (regular people) own factors
šProduct Market = where goods and services are sold
šBusinesses own products

8. Supply and Dance
1.When cane-seller's notice that people want their product, what do they do?
2.When people stop wanting canes, what happens then?
3.What is it called when the price is just right?
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9. Demand - p. __
Law of Demand: People demand more of a good when the price is low
Quantity demanded: amount of a good people want at a particular price
Ex: As a consumer you will want to buy more sneakers if they cost $10 rather than if they cost $100.
(1, $100) (3, $10)
P (price)
Q (quantity)

10. Supply
Law of Supply: Businesses produce more of a product when they know they can sell them at a higher price
Quantity supplied: amount of a good that is supplied at a particular price
Ex: If you know you can sell your sneakers for $100 a pair you will want to make more sneakers than if you could only sell them for $10.
(1, $10) (3, $100)
P (price)
Q (quantity)

11. Equilibrium!
Where the 2 lines intersect is the price the good will be sold.
Equilibrium price: the price where supply and demand are equal
The highest price a good can be sold at and not have a shortage (not enough) or surplus (too much).

12. Surplus and Shortage
What happens to the price if we have too much supply and no demand for a good?
SURPLUS: Supply > Demand = lower price
SALES are usually the result of a surplus.
What happens to the price if we have a lot of demand but not enough supply of a good?
SHORTAGE: Demand > Supply = higher price
GAS PRICES go up during gas shortages.

13. Supply and Demand Practice
On paper, draw a supply and demand graph
Label parts of graph
Estimate the equilibrium price and quantity
Price
Units Demanded
Units Supplied $5 10 60 $4 18 51 $3 28 41 $2 38 29 $1 52

14. Pages 568-572, for extra help with Demand Curve Shift.

15. Demand Review Demand curves show demand schedules in graph form.
As price changes, we move along demand curve to a different quantity Always downward sloping - why?
Law of Demand - as the price for a good increases, quantity demanded falls
Demand schedules show the quantity demanded over a range of prices

16. Demand Shifts Review
Substitutes - two goods that are bought in place of each other. EX: hot dogs and hamburgers
Complements - two goods that go hand in hand. EX: hot dogs and buns
If something besides the price of a good changes, we need to draw a new curve.
Can be supply or demand, depending on the FACTOR involved

17. Illustration of Demand Shift
Increase in Demand = curve shifts to the right
Decrease in Demand = curve shifts to the left.
Price
Price D1 D2 D2 D1
Quantity
Quantity

18. Fast Food Foldable
You will create a foldable on the six determinants of demand, which are
Changes in Population
Changes in Income
Changes in Tastes
Changes in Expectations
Changes in Substitutes
Changes in Complements
Your foldable should include
Type of Change (on outside)
Description of what the change means (on inside)
Example of this change for your fast food chain (on inside)
and drawing of shift