agenda go over last night’s hw market economy notes homework tomorrow we will start our project...
TRANSCRIPT
Agenda
Go over last night’s HW
Market Economy Notes
HomeworkTomorrow we will start
our project for this 6 weeks.
Identify 2 complimentary goods.
Identify 2 substitute goods.
Two trade-offs and identify the opportunity cost of each.
WEDNESDAY MARCH 25, 2015
Traditional
Command
Mixed Market
Large Businesses
Small Business
G= Government I = Individuals B= BothV=Village.
Traditional
Command
Mixed
Market
Large Busines
ses
G B I
Small Busines
s
V G I I
G= Government I = Individuals B= BothV=Village.
SPECTRUM
Government Control
Free Economy
Put in Order from most Government control to least (Market, Mixed, Command)
SPECTRUM
Government Control
Free Economy
Put in Order from most Government control to least (Market, Mixed, Command)
Command
Mixed
Market
The amount of money you make from selling a good or service
The desire to make money is called profit motive!
PROFIT
Competition acts as a regulatorThat means that it controls the price and quality of an item!
Gas Station 1
Gas Station 2
ROLE OF COMPETITION
Definition: Willingness of consumers to buy goods and services.
Law of Demand consumers are more willing to buy more goods at lower prices than at higher prices.
DEMAND
Supply- a business’ willingness to sell products
Law of supply- businesses will supply more goods at higher prices than they will at lower prices.
SUPPLY
Fixed Costs- the same no matter how many units of a good are made. (Rent)
Variable Costs- costs that change with the number of products produced (Electricity)
Total Costs- = Fixed + Variable.
COSTS
Surplus
When a business makes too much of a product
Shortage
Insufficient amount of materials
SURPLUS V. SHORTAGE
Marginal benefit- additional or extra benefit associated with an action
Marginal Costs- extra or additional costs of producing one more unit
Example: Happiness from Eating
Krispy Kreme Donuts. Each donut makes you fuller and sicker
Example: Buying a factory to
make one pair of shoes is expensive. It is less expensive with each pair made.
MARGINAL BENEFIT
Trade-off- choosing one thing for another
Opportunity Cost- the value of the thing you gave up when making a trade-off
HOW DO WE MAKE THESE CHOICES?