Business and

Investment

1. Which choice best identifies the similarity between mass production and automation?– Both automation and mass production use technology and machinery– Both automation and mass production use blue collar workers– Both automation and mass production use unskilled workers– Both automation and mass production always use robotics

 2. Which is the best example of a white collar job?

a. Making fancy lattes and coffee drinks b. Temporary office workc. Working as a cashier at the mall d. Managing the local copy shop

3. Imagine you have a bowl of chocolate ice cream. Your first bowl tastes incredible. Your second bowl tastes good. The third makes you full. The fourth bowl makes you sick? What property is this an example of? ***

 4. If you were starting a new business, and you had a hammer, what factor

of production would it be considered?  5. What clause of the Constitution states that all states need to respect

the rules of other states?•  6. Which amendment gave women’s suffrage?a. 12th b. 18th c. 19th d. 22nd

• What will happen to a company if they add too many factors of production (land, labor, capital, entrepreneurs)? What is this known as?

EX: Subway, if subway had too many workers they would get in each other’s way and would not be able to produce as many sandwiches as they could if they had fewer workers

WARM-UP:• If you could start a business would you work on your own or with a partner? Why?

Sole Proprietorships • Business owned and operated by ONE person. Anyone can start one.

• PROS: make all the profit & helped out by the government (Small Business Administration)

• CONS: – unlimited liability—responsible for all debts. – Must raise all initial capital (human, physical and financial)

– Limited Life: Business dies when owner does

Partnerships

• A partnership is a business owned by 2 or more people.

• PROS: – Share the burden of debt and capital.

– Raise $$ by adding partners– No corporate income tax

• CONS: – each partner has unlimited liability

Corporations •A business formed by filing a charter with the gov’t. •Stockholders who buy shares, or stocks, OWN the corporation.

–Board of Directors is hired to run the business

•PROS: – Raise money easily through selling stock to shareholders–Limited liability (only liable for your investment)–Unlimited life

•CONS:–Gov’t regulation and might have to pay corporate tax–Owners have little say in management of corporation

Franchises• Businesses when individual people buy the rights to manage or run a large company’s store.

–Example: McDonalds is a massive, multi-national company. But the local McDonalds in Scotland Neck is franchised to an individual owner.

•PROS: ??

•CONS: ??

Words to Know for Businesses

LIABILITY: What is risked if something goes wrong in a business.

Words to Know for Businesses

STOCK: A partial ownership in a company.

Words to Know for Businesses

DIVIDENDS: The money shareholders get when a company makes a profit.

Investment-Spend $$ to make More $$

What you can invest in and how you can invest your money

INVESTMENT IS A WAY TO USE RESOURCES THAT COULD BE USED FOR IMMEDIATE BENEFIT FOR A GREATER BENEFIT AT A LATER TIME.

Types of InvestmentHuman Capital

– the people—through pay, benefits, education and training to increase productivity!

Investment-Spend $$ to make More $$

What you can invest in and how you can invest your money

Types of Investment

• Physical Capital– Machinery, Technology, buildings, tools

Investment-Spend $$ to make More $$

What you can invest in and how you can invest your money

Types of Investment• Natural resources

– Land (renewable & nonrenewable resources)

Investment-Spend $$ to make More $$

What you can invest in and how you can invest your money

Types of Investment• Financial Capital- MAKE MY $$$ GROW!!!

– Stock

Investment-Spend $$ to make More $$

What you can invest in and how you can invest your money

Types of Investment• Venture Capital

– Investment in a NEW business

OVERALL:Investment seeks to increase productivity by increasing inputs.• EX: I invest in machinery (input) and I get more cars (output)

3 Types of Market Structures

•Perfect Competition•Monopoly•Oligopoly

QUESTIONS WE WILL ASK ABOUT THESE MARKETS

1. What are some examples?2. How many firms are in this market?3. Who or what sets the price in this

market?4. How easy is it to get in this

market?5. How alike or different are the

available products?

Perfect Competition

• Examples:– Apple Farmers, Corn Farmers

• Number:– Many small firms

• Amount of price control:– HIGH Competition– NO Price control, prices set by supply & demand

Perfect Competition (cont.)

• Barriers (how easy is it to get in the market?):– Easy Entry, Easy Exit

• Nature of Product (How alike or different the available products are) :– Homogenous (goods are the same, all can be substituted for one another)•EX: Red Delicious Apple

Monopoly: One company provides the product

• Examples:– Standard Oil of late 1800s

• Number:– 1 Large Firm

• Amount of price control:– NO Competition / The monopoly sets the price

Monopoly

Oligopoly

• Examples:– Cell phones, airlines, cereals, soft drinks

• Number:– A FEW large firms

• Amount of price control:– SOME Competition / SOME price control b/c the few large firms keep prices pretty close.

Oligopoly (cont.)

• Barriers:– Difficult Entry and Exit

• Nature of Product:– Differentiated (similar products but not exactly the same can be substituted)•EX: Coke or Pepsi•Whopper or Big Mac

MERGERS• Merger: is when two firms join together.

• Horizontal Merger: 2 firms w/ similar product lines combine– EX: Nike and Reebok combine.

• Vertical Merger: 2 firms working at different stages of production of a good combine.– EX: Ford buys a tire company

Labor Unions• Union: organization that represents the interests of workers. (12% of workers)– Unions engage in collective bargaining, using mediation and arbitration to make conditions better for workers

– Closed shop: you have to be in the union to be employed. Ford and General Motors have these.

– Right-to-work states: states where the closed shop is illegal.

Create a Business!1. Name Business2. State the major good or service you will be

producing.3. State the TYPE of Business (corporation, sole

proprietorship, partnership)?4. Identify your fixed costs5. What investments will you make to get started?

• Human Capital (how many workers, what types of jobs, skilled or unskilled workers?)

• Financial Capital• Physical Capital

6. Create Advertisement for product or business card on the back.

I AM COLLECTING THIS AT THE END OF CLASS FOR A GRADE.