Chamberlain

Circular Flow Activity DirectionsCreate two columns of wordsOrganize the columns into “like” terms

Businesses and Individuals/ConsumersThink – what do these people provide?

Once you have organized the terms – match the term to the term from the other column

Circular Flow of a Market EconomyBusinesses IndividualsSupply Side

WagesInterest

Demand SideGoods and Services

Supply SideLaborCapital (Investments)

Demand SideMoney – pay for good or

service

Supply and Demand Supply: Amount of a good or service sellers

are willing and able to offer at different pricesLaw of supply – As the price increases,

suppliers will increase the supply of a product Maximize profits

Demand: Amount of a good or service that buyers are willing to pay for a productLaw of Demand – As the price increases, the

demand will decrease

Market Price• Market Price

– The most efficient price at which buyers and sellers agree to do business

– Equilibrium• Too Much Demand,

Too Little Supply – Shortage

• Too Little Demand, Too Much Supply - Surplus

Plotting Supply and DemandSelling Price of the doll

Number supplied per week per store

Number requested per week per store

$1.00 35 530

$2.00 130 400

$4.00 320 140

Burger-Rama Dolls

Selling Price

Supply Demand Results

$2.50 A 160 310 Shortage 150

$3.80 B 300 160 Surplus 140

Free C Over 600

$3.15 240 240 $3.15

Supply and DemandJoe sells baseball

cards on the weekends. He is especially interested in Sammy Sosa cards. Here is his data from past weekends.

Create a graph using the data.

Price Supply of cards

Demand of cards

$1.40 10 90

$2.00 19 50

$3.00 42 25

$4.20 94 20

Supply and DemandWhat is the market price (equilibrium)?

How much would be demanded and supplied at $3.25What are your results?

How much would be supplied and demanded at $1.75What are your results?

Brainstorm in your group why people start or stop buying a product besides just changes in price?

Why would suppliers produce less or more of a project?

Why would the demand for a product increase or decrease?Change in taste

United Colors of BennetonSubstitutes – Competition

Cheaper or better qualityNumber of consumers increases or decreasesComplement – enjoyment of one is enhanced by the

otherIncrease in demand of complement = increased demandIce cream: price drops, whip cream sales increase

Future price changes anticipated – weather or disasterMarketing – Young, old, cool, cutting edge

Why would the supply of a product increase or decrease?Cost of Inputs change

Inputs – products/services used to make your product including labor, land, capital, marketing

More firms/businesses enter the market

Change in taste

ElasticityRelationship between the demand for a

product and the change in price of a productBasically, if the price changes, how many

people will stop buying the product? At what point will you see greater changes?

Milk, Bread, Gas, and Toothpaste would be considered Inelastic

IN the short run – 6 months to a yearWhat products would you consider elastic?

If a candy bar goes up in price a nickel, how many more people will not demand it?

Chapter 14 – Individual AssignmentsYou choose the order you want to complete them INDIVIDUAL Work! Any sharing or copying and both

parties will receive a Zero! I will come around and check off the work you complete

daily – you are not handing this work in – Complete the work and staple it together as a study guide

Section 2 and 3 questions – 20pointsArticle : Outsourcing - 20 pointsArticle: Get Healthy or Else – 20 PointsArticle: Walmart and Unions – 20 Points

3 types of BusinessesSole Proprietorship

Partnership

Corporations

Sole ProprietorshipWho owns?70% of all businesses are sole proprietorships

Examples?

Advantage?

Disadvantage?

PartnershipWho owns?

Examples?

Advantage?

Disadvantage?

CorporationResponsible for 85% of all the products and

services we useVery Large Business

No specific owner Company is controlled by a board of directors who

choose a CEO (Chief Executive Officer) to run the company

People like you and me can invest in a company by buying stocks or shares of the company Company will share profits with stockholders

FranchiseMcDonalds: Sole Proprietorship and a

Corporation – HOW?Individuals buy the rights to build a McDonalds

from the corporationThe individual has certain legal requirements

that it must adhere to as far as McDonald’s Specials and Promotions

Corporation makes money on the McDonald’s products that the individual buys – the better the restaurant is doing the better both the individual and corporation do

The Rights of Businesses“Get Healthy or Else”

Should a company be able to fire an employee if they do not or can not quit smoking

Matter of being business smart Companies pay millions in healthcare benefits The unhealthy cause the company’s insurance

premiums to riseIs this infringing on a person’s personal life?Obama and Clinton have planned to fix our

healthcare system to avoid issues like this. What do you think?

LaborUS is losing its hold on the world as

providing the most qualified/educated workers willing to work very hard for their money.

Main issue – Labor competition overseas.“Outsourcing”

What is outsourcing? Why is outsourcing good for US economy?

Efficient Why is outsourcing bad for the US economy?

China and India may overtake us on the long run

Compare the cost of laborYou are providing a company a service when you agree to

work for them…it just so happens that our labor is costing companies more and more each year.

China, India and Mexico are the equivalent to Walmart for laborAccountant: US, $60,000.00India, $4000.00

Garment worker: US, $6-10 an hour China, $.25

Factory work: US, $15 an hour Mexico, $2.00

Chip designer: US, $85,000.00 India, $12,000.00Financial Analyst: US, $85,000.00 India, $12,000.00

In Defense of Labor1800’s – US Industrial Revolution

Machines increase speed of productionMasses head to cities for jobs in factoriesRise in wage labor

12-16 hour days – 7 days a week Dirty, Dangerous and Paid little

Leads to rise in Labor UnionsOrganization of workersGoal is to improve working conditions, wages

and workers’ rights

Company and Union TacticsStrikeBoycottSlowdownSit-inDemonstrate

ScabsHired SecurityLock outYellow dog contractsBlack listed

CompromiseCollective Bargaining

Process by which unions and businesses reach agreements Give and Take

Today – Union membership is fallingNot as powerful

Outsourcing Americans want cheap goods – Walmart

Many people look down on unions – cause wages to skyrocket, which causes the price of goods to increase

WalmartProvides a model to the rest of the businesses

in the USDo not compromise with or allow unions in your

store Shut down the meat department in Texas

2007 revenue = $378 BillionMake workers sign yellow dog contractsGive workers tests to find indications of union

sympathizersBreak laws but it is cheaper to pay fines then

give workers benefits or allow unions