sally sold seashells by the seashore an introduction to economics
TRANSCRIPT
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Sally Sold Seashells By The Seashore
An Introduction to Economics
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Sally started his own business.
• Entrepreneur–Creation–Organization
–Risks–Responsibilities
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Sally’s Seashell Store competed against a similar business named
Oliver’s Ocean Originals.
• Free Enterpise System–Motivated by Profit (money kept after
expenses)–Competition Helps the Consumer–Monopoly, Oligopoly, Perfect Competition
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Sally sold collected shells andalso offered a guided tour to
collect your own shells.
• Goods – tangible or physical products• Services – intangible products• Need – required for survival• Want – like to have
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Sally’s store was a small shack on the beach with tables and bookcases. He hired
two kids to collect shells. He also developed a way to locate quality
seashells.• Factors of Production– Land– Labor– Capital– Entrepreneurship
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During tourist season, Sally sells seashells for $2.00 each. He tried to sell them for
$3.00, but sales plummeted.• Scarcity – allocation of limited resources for
unlimited wants• Demand – the quantity of goods a consumer is
willing and able to buy• Elastic Demand – a change in price creates a
change in demand• Inelastic Demand – a change in price has little
effect on the demand for a product
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Sally has noticed that he rarelyhas repeat customers.
• Diminishing Marginal Utility – people will not buy more than they can reasonably use, regardless of price
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Sally has seen prices rise during hurricane season when shells are hard to find. He also saw prices drop when a competitor imported shells from the Pacific ocean.
• Supply – the amount of a good that producers are willing to provide
• Surplus – more supply than needed• Shortage – less supply than needed• Equilibrium – where demand and supply meet
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I don’t know how this applies to Sally.• Gross Domestic Product (GDP) – total market
value of goods and services produced nationwide during a given period of time
• Federal Reserve – government agency regulating lending to stimulate the economy
• Business Cycle – periodic pattern of expansion and contraction the economy goes through
• Inflation – a jump in prices that slow consumer spending
• Recession – slowing of spending; the Fed lowers the interest rate to promote spending