First You Must Understand the Law of Supply and Demand As demand increases the price goes up which attracts new suppliers who increase the supply bringing the price back to normal However in the ID: 782532
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Slide1
Unit 3
Microeconomics: Market & Exchange
Slide2First You Must Understand the Law of Supply and Demand
As demand increases the price goes up which attracts new
suppliers
who increase the supply bringing the price back to normal. However, in the
marketing
, of
high
price (prestige)
goods
, such as perfumes, jewelry, watches,
cars
, liquor, a
low
price may be
associated
with low
quality
, and may reduce demand.
Slide3Supply Curve
http://www.netmba.com/econ/micro/supply/curve/
The higher the price, the larger of the quantity supplied if all other things stay constant.
Slide4Demand Curve
http://www.netmba.com/econ/micro/demand/curve/
Quantity demanded moves in the opposite direction of price if all other things stay constant.
Slide5Signals Sent to Buyers & Sellers
Buyers
Sellers
Price of Other Goods
Number of Sellers
Price of Relevant Inputs
Technology
Expectations
Customer Preference
Prices of Related Goods
Income
Number of Potential Buyers
Expectations of Price Changes
Slide6How Markets Interact with Consumers
We will analyze several examples of how consumers are effected by production.
Look at Lesson Five- Activity 2: Markets Interact- The Sequel. You will also need the handout called Visual 2.2: Changes in Supply/Demand.
Slide7Business Organizations
Sole Proprietorship
Partnership
Run by one person
No distinction between owner and business
All assets and debts are the proprietor’s.
Owned by more than one person.
Combine property together
Share profits and debts together
Slide8Business Organizations
Corporation
Non-Profit
Separate legal entity from the owners and employees.
A corporation has members and officers. (President, Vice-President, Secretary, Treasury, etc.)
Has a publically registered charter
If a corporation fails, all investments are split up with the members. The liabilities are not shared with its members.
Does not have private owners.
They have controlling boards or members.
They cannot sell their shares for profit or benefit personally in any way.
They are tax exempt.
Slide9Models of Market Structure
Perfect Competition
Monopolistic Competition
1. All firms sell an identical product.
2. All firms are price takers.
3. All firms have a relatively small
market share
.
4. Buyers know the nature of the product being sold and the prices charged by each firm.
5. The industry is characterized by freedom of entry and exit.
1. All firms produce similar yet not perfectly substitutable products.
2. All firms are able to enter the industry if the profits are attractive.
3. All firms are profit maximizers.
4. All firms have some market
power
, which means none are price takers.
Slide10Models of Market Structure
Oligopoly/Cartel
Monopoly
It is similar to a monopoly but instead of one firm controlling the market, there are at least two controlling the market. This can also be referred to as a cartel to fix prices.
Examples: BP/Shell and Coke/Pepsi
Only one firm controls the market.
Examples: Standard Oil, Microsoft, and the Bell Companies
Monopolies are against the law in the United States because of the Anti-Trust Acts.
Slide11Role of the Stock Market
The Stock Market is the center of the United States economy. You do not have to have money invested on the market for an effect to be felt.
Companies agree to sell stocks of their companies. The stocks can be sold but depending on what the stocks are worth that day will determine whether you receive a profit or a loss.
It is your job to pick stock that is traded on the Stock Market. You are to track that stock every day to see how much it is worth at the end of the week. You will have to sell your stocks to see if you made a profit or took a loss. Imagine that you have $10,000.00 to invest in the stock market. What are you going to invest in?
Slide12Distinguish Between…
Fixed Costs
Variable Costs
A cost that does not vary depending on production or sales, such as rent, property taxes, insurance, or interest expense.
A
cost
of
labor
,
material
or
overhead
that changes according to the
change
in the
volume
of
production
units
. Combined with
fixed costs
,
variable
costs make up the
total cost
of production. While the total variable cost changes with increased production, the total
fixed
costs
stays
the same.
Slide13Analyze the Influence Improved Factors of Production Has Had on Industry
What are the factors of production?
Natural
Resources, Human Resources, Capital Resources, and Entrepreneurship
Discuss how each of these have been influenced by the following: Technology, Education, Training, Specialization, and Division of Labor.
This will be a classroom discussion. You must participate in order to receive an assessment.