How well do you know Economics?

Name the four factors of production. Land Labor Capital Entrepreneurship

Define each factor of production. Land – natural resources (things like trees, seeds, animals, water, grass) Labor – Workers, manual labor Capital – equipment or anything you need to run a business or to do a job Entrepreneurship – the skill and initiative of the person who starts and manages a business.

Company ACompany B QualityTop QualityLesser Quality DurabilityLong LastingWear out quickly Celebrity endorsement Pro basketball star autographs every ball No autograph Cost$95$15 1.Which ball would you like to buy? Why? 2.Which company will probably sell more balls? Probably company B, since their product is less expensive and can be afforded by more families. 3. Which company makes more money? We can’t tell from this chart.

Company ACompany B QualityTop QualityLesser Quality DurabilityLong LastingWear out quickly Celebrity endorsement Pro basketball star autographs every ball No autograph Cost$95$15 What would happen if: 1.Company A sold their ball for $15? More sales for Company A; Company B might have to drop their price or go out of business. 2.Company B got the top pro player to autograph each ball sold? More sales for Company B.

Define Consumer. A person who buys or uses a good or service.

Define producer. A person who makes something, especially something for sale.

How is labor a factor of production in these businesses? A fast food restaurant? Workers are needed to cook food and serve customers. A software company? Workers plan software, develop it for the computer and sell it. A veterinary clinic? Veterinarians, technicians, and office assistants are all needed to help the animals.

How is entrepreneurship a factor of production in the same 3 businesses? A fast food restaurant? A software company? A veterinary clinic? In each case someone thought of the business and he or she invested their time and money to start the business in an attempt to make a profit. The owner or a manager continues to build the company.

How is land a factor of production in: Farming. Automotive production. Mining. Farming requires fertile land with sufficient rainfall for crops. An automotive factory requires several acres of land. It should be located near a supply of workers and good transportation. Mining requires an area rich in minerals.

How is capital a factor of production in: Farming. Automotive production. Mining. Farming - Money is needed for seeds, animals, and equipment. Automotive production - The building, tools, and machines are part of the capital requirements of a factory. Mining - Mining equipment is the capital requirement.

What economic reasons bring people to cities? Jobs tend to be more plentiful and higher paying. Markets have more selection and lower prices. (housing, land)

What is the largest industry in Ohio? Agriculture: there are many reasons, but favorable climate and land have built and important tradition of agriculture in Ohio.

Why might the U.S. trade food for oil from Kuwait? The U.S. produces more food than the people of the U.S. use, but it does not produce enough oil to meet demand. Kuwait is in the opposite situation. The two nations trade to meet the needs of their citizens.

Supply – goes up Demand – may increase slightly (due to lower prices) Price for oil – goes down When the U.S. brings in oil from Kuwait, what happens to: supply demand price for oil

What are the advantages of economic competition? Variety of products Lower prices Raises quality Bigger selection

What are the disadvantages of economic competition? Forces some companies to fail. Encourages aggressive business practices. Is sometimes based on wrong factors (advertising, etc.)

Supply Greater supply of restaurant food. Demand Demand will probably go up with more choices and lower prices. Price Prices will likely go down. There has been only one restaurant in town for many years. People say the prices are high, but they eat there anyway. A new fast food restaurant comes to town. How does this change affect:

What can the old restaurant do to stay in business? Lower price Raise quality Increase advertising Add another, different item to the menu

Think of a product you bought. How did each of the following factors influence your decision to buy it? Price Quality Advertising Did you need or want this product?

Would a consumer be more or less likely to buy a product if: Price went down. Quality went up. Price went up and quality went down. Price stayed the same, quality went up. More likely More likely Less likely

# of pairs Company A Green Soccer Shoes Sales Figures Company B Only one company made green soccer shoes in Which company? How many pairs did it sell? Company A – 3000 pairs.

# of pairs Company A Green Soccer Shoes Sales Figures Company B In 2000, a competitor began selling green soccer shoes. What happened to Company A’s sales? Sales went down.

# of pairs Company A Green Soccer Shoes Sales Figures Company B How could Company A sell more shoes again? Lower price, raise quality, develop a new product.