Introduction to Economics 5 Capitalism Defined. Warm Up Use the first 15 minutes of class to produce...
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Transcript of Introduction to Economics 5 Capitalism Defined. Warm Up Use the first 15 minutes of class to produce...
Introduction to Economics 5
Capitalism Defined
Warm UpUse the first 15 minutes of class to produce your goods.
NEWS FLASHThere is a gas shortage, therefore all variable costs are increased by $10.You must also create a sign for your store (make sure it includes your logo).You may use left over materials from your clothing or you can buy new paper to create your sign on.
Goods
Physical Capital- Human-made objects used to create other goods and services. E.g. factory building, specialty
machinery, etc… Can save companies time and money
in the production process.
Producer Price Index
PPI- indicator that determines the health of the nation’s economy that judges the price of materials vs. the price of finished goods from year to year.
Output versus Input
Output- the level of production; is most profitable when price is equal to marginal cost.Input- Any change in the cost of an input such as the raw materials, machinery, or labor used to produce a good, will affect supply.
Marketplace
Keep track of receipts in log books for producerFirst 5 minutes-1st person shops, other man’s shop2 minutes-adjust prices5 minutes-2nd person shopsAdd up receipts
Date Product/Purchase
Business Amount +/-
Authorization/ Signature
Balance
Warm Up:The Market
Copy and Answer:Evaluate the market. As a consumer: What items did you buy? Were they affordable? Too cheap? Too expensive? Was anything missing? As a producer: Did you have enough to sell? Why or why not?
Law of Diminishing Return
When one of the factors of production is fixed in supply, additions of other factors will lead to an increase in returns up to a point, but beyond this point returns will diminish.
Increasing returns
Recycling When a producer can reuse a material
in a new way this will increase the output vs. input ratio.
Increasing returns
Education and training When your employees are better
trained in their field/specialization they will be able to be more productive.
If they can have the knowledge to solve problems on their own, they keep work stoppage to a minimum.
Investing in your Company
Take into account new investments, purchase them and get:Education $50- 6 free sheets of white paper/3 colored /2 printed paper or fabricRecycling $75- materials ½ off