Bottom Line- We all Need/Want $$$ The profit motive acts as an incentive for people
to produce and sell goods and services. Do you agree with this statement? Why or why
not? Why do people start their own businesses? What are some of the costs and benefits
involved with the decision of starting a business?
Governments and institutions help participants in a market economy accomplish their financial goals.
Name 5 Entrepreneurs who Name 5 Entrepreneurs who you consider to be successful. you consider to be successful.
Come up with a list of traits Come up with a list of traits that these people share. that these people share.
Costs, Revenue & Profitsp. 132-137
Terms to Know Break Even Point
Fixed Costs- costs incurred even when there is no activity.
Example- rent & equipment
Variable costs- costs incurred with each product produced.
Example- ingredients, labor
Total Costs= FC + VC
Cookie Recipe Break Even Point
How many batches until you reach the break-even point?
How many batches until you make a profit?
Types of Businessesp. 61-69
Sole Proprietorship-owned and operated by one person…70% of businesses
Pros: easy to start up; few restrictions; full decision making power
Cons: full liability; Limited growth; limited life
Types of Businesses
Partnership-owned by 2 or more co-owners
Pros: easy start up; few restrictions; specialization; individual taxes; more capital
Cons- greater liability; conflict with partner; temporary
Types of Businesses
Corporations-raised with venture capital through share holders
Privately held vs. Publically held
Pros- Limited liability for owner; lots of capital; professional management (CEO) Long life
Cons- complex; loss of control; more government regulation; double taxation
Other Types of Organization Franchise
parent company sells the rights to open branches to private individuals
Non Profit Does not
make a profit
Exempt from taxes
Works for a social purpose
Cooperative Owned and
operated by a group…usually the workers.
Run democratically
Sweet Opportunities
With your group come to a decision about which business structure each
of the four would-be entrepreneurs should
set up.
(hint: cost-benefit analysis)
The Production Function p.127-130
Terms to Know
Stages
Production Function- shows how total output changes when a single variable changes
Usually applies to hiring workers.
Stage 1- Increasing Marginal Returns- each worker hired contributescontributes moremore to the Total Output than the one before.
Stage 2- Diminishing Marginal Returns- each worker hired contributes less to the Total Output than the one before.
Stage 3- Negative Marginal Returns- too many workers causes total production to fall.
You Didn’t Build That?
What was Mitt Romney’s Response to Obama’s remark “you didn’t build that”?
What was Barak Obama’s Message?
Use economics to analyze the two views? Which one is most realistic?
Responsibilities of Businesses Hire and fire employees Screen employees Compensated for property Keep intellectual property Paying taxes Deal honestly Honor Contracts Practice Equal Opportunity Ensure public safety
Ethical Responsibilities
Do businesses have a responsibility to “give something back” to the community?
Are jobs enough?
Government’s Role
Create and Enforce safety standards
Protect the consumers from fraud
Prevent (or minimizes) Market Failure
Provide for the poor and powerless
Increase efficiency in the market
Defend our economic interests
Maintain fair trade Establish a system of
justice Collect Taxes
Business Plan Get into your teams and brainstorm ideas for
your business. If you don’t already have a business get a few
partners and brainstorm a list of skills that you as a group possess. Turn those ideas into possible businesses. What are the needs we have as a class?
If you already have a business: How are things going? Have you made any Jo? Make a list of suggestions for improving your business. Would an Advertisement help you?
Make a chart of pluses and minuses.
Business Plan
Don’t forget to discuss the availability of resources, potential profit, special challenges, possible help you could use, and how each of the elements of business operation will be addresses.
Your goal by the end of today's class is to generate a list of possible services/businesses and ways to implement them.
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