Lautner Laces

What is the Economy

• Economy: Study of choices people make to satisfy their wants and needs

• Microeconomics: Study of Economics at the Business level

• Macroeconomics: Behavior of the entire economics

Market Economy

• Firms-hires or demands factors of production and utilizes them to create/sells goods/ services

• Corporation-infinite life, limited liability, can raise money easily, fund raise through stock market

• Proprietorship- single owner, full liability, limited access to fundraising, easier to start than corporation

• Partnership- two or more owners, shared liability, limited access to liability

Resources

• Use workers from third world countries

• Make shoes cheap

• Sell shoes for mediocre price considering Lautner endorsement

• Purchase cheap material

• Similar to “Nike Strategy”

Resources Continued

• Natural Resources: Things grown or produced naturally

• Human Resources: Labor

• Capital Resources: A combination of both

Types of Markets

• Factor Market: Where Businesses buy resources to sell their products

• Product Market: Where consumers purchase products or goods from supplier.

Three Big Questions

• What to produce?

• How to produce it?

• For whom to produce?

• These questions are answered in market economies by prices set by competition in a free market

Prices and Information

• prices provide information about a product in a free market

• if a price is acceptable to a consumer, a trade will be made

• if a price is unacceptable to any consumers, no trade will be made

• Individuals: buy goods that make them happiest

• Firms: use resources to make profits

• Ability to make individual decisions- individuals and firms can pursue employment, property, or services as they wish

• Self interest: the force that drives the actions of individuals and businesses

Price and Profit

• Make Shoes that are Endorsed by Taylor Lautner

• Made from third world countries by unskilled laborers

• Will be slightly low quality

• The athlete will appeal to the younger crowds

• The price will appeal to low income families

• The price of production will be low enough to generate a massive profit

• Like Nike, endorsing popular figures such as Taylor Lautner will bring popularity among young teenagers’

• Because brands like Nike and Adidas endorses people like Tiger Woods, Michael Jordan, and David Beckham, it is well known among consumers

Why this is the best option

• When made by unskilled laborers, the materials will be cheap and will be simple to produce

• If it is cheaply made and is sold for an affordable price, the shoes will generate high profit

• Since a popular figure will endorse the product, many consumers will be attracted to the product