BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
1.1
In 1903, Henry Ford said:
“You can have a car in any colour you want as long as it is black”
Obsolete
Fidget spinners, Putty/slime, VCR, Type writer, Slinky, Orbeez
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Consumer influence on Price
-We “vote w/ our feet/hand/mouse”
-Either business or consumers influence price: low → medium → high
Consumer influence on Service
Gas: Business
Cereal: Consumers
Clothing - Name brand: Business
No named brand: Consumers
Cars: Business
Water to your house: Business
Water Plastic Bottles: Consumers
Cell phones: Business
Cell phone plans: Consumers
Entrepreneur:
Networking, Convincing, Persistence, People skills, Knowledge, Enthusiasm
Needs
Wants
-Clothing
-Food
-Water
-Housing
-Electronics
-Designer items
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
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Functions of a business:
1. Production
2. Human Resources
3. Finance
4. Marketing
5. Management
Economic Resources:
1. Land; warehouse, domain, natural resources
2. Labor; Automation
3. Capital; equipment, tools, money
4. Entrepreneurship/information
Ikea Kiosk:
Land: Ikea stores, farms
Labor: Waiter, chef, cashier, custodial
Capital: Plates, utensils, signs, tables, receipt machine, menu, cooking materials
Entrepreneurship: Head chef
Real intro to Econ:
Interdependence:
Scarcity
$5- pancakes x4, bacon, orange juice
$7- good cheese, crackers, grape juice
$8- dunkin donuts or krispy kreme, coffee
$5- mystery item
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3 Economic Questions:
1. What g/s should be produced?
2. For whom should these g/s be produced?
3. How should these g/s be produced?
Demand:
Quantity of a g/s that you are willing + able to buy
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
----------------------------------------------------------------------------------------------------------------------------- -1.5
Law of Demand:
AEBE, as price increases, quantity demanded decreases
$1: 10
$4: 1
$8: 0
AEBC, as prices decreases, quantity demanded increases
QD /month
$ of a burger
$0
$1
$2
$3
$4
$5
$6
$7
-When price changes, QD changes. NOT DEMAND
-Movement along the curve
Determinants of Demand
AEBE, factors that changes demand
1. Income
AEBE, if income rises, demand rises
AEBE, if income decreases, demand decreases
Inferior goods:
Used clothes
7
6
5
4
3
2
1
0
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
Mac N Cheese
Population:
AEBE, if population increases, demand increases
AEBE, if population decreases, demand decreases
Taste and Preferences
AEBE, if popularity increases, demand increases
AEBE, if popularity decreases, demand decreases
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
----------------------------------------------------------------------------------------------------------------------------- -1.6
Expectations:
AEBE, if you think prices will increase, your demand increases
AEBE, if you think prices will decrease, your demand decreases
Complementary Goods:
PB
—
=
J
—
$4
$2→$4
AEBE, if the price of a complementary good increases, demand decreases
Substitute Goods:
Sprite/$2 = 7 Up/$2→4
AEBE, if the price of a substitute good increases, demand increases
AEBE, if the price of a substitute good decreases, demand decreases
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
---------------------------------------------------------------------------------------------------------------- --------------1.7
Supply:
→ High Prices
→ What producers are willing + able to sell (supply) at various prices
Law of supply → AEBE, as price increases, quantity supply decreases
→ AEBE as price decreases, quantity supply increases
Supply Schedule for Mc N’ Cheese
Price/case in $
QS → /month
18
19
20
21
22
2
3
4
5
6
Determinants of Supply → Non-Price Factors
1. Input Costs
AEBE, an increase in input costs leads to a decrease in supply
AEBE, an decrease in input costs leads to an increase in supply
AEBE, increases taxes, less supply
AEBE, decreases tax, more supply
AEBE, increases subsidy, increase supply
AEBE, decreases subsidy, decrease in supply
2. Number of Sellers
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
AEBE, if number of sellers increase, increases supply
AEBE, if number of sellers decrease, decreases supply
3. Technology
AEBE, if technology gets better, increases supply
AEBE, if technology gets worse, decreases supply
4. Environment
AEBE, bad climate weather, natural disasters, drought, supply decreases
AEBE, good growing season, supply increases
5. Expectation of Price
AEBE, if price is expected to increase, supply decreases
AEBE, if price is expected to decrease, supply increases
6. Price of Related Inputs
Spinach
Kale
$2
$2-#4
AEBE, if the price of a related input increases, supply decreases
AEBE, if the price of related input decreases, supply increases
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
----------------------------------------------------------------------------------------------------------------------------- -1.8
Everyone started drinking juice instead of milk:
What would happen to the supply: Nothing
What would happen to demand: Decrease
Fewer people wanted to be dairy farmers?
What would happen to supply: Decrease; # of sellers
What would happen to demand: Nothing
Prices for feed to cows went up?
What would happen to supply: Decrease
What would happen to demand: Nothing
Ice cream became Canada’s most popular dessert?
What would happen to supply: Nothing
What would happen to demand: Increase
Pickles were found to cure the common cold?
What would happen to supply: Nothing
What would happen to demand: Increase
The weather was bad and there weren’t many cucumbers grown?
What would happen to supply: Decrease
What would happen to demand: Nothing
People started using hot peppers instead of pickles on their burgers?
What would happen to supply: Nothing
What would happen to demand: Decrease
Foreign countries started importing pickles at a lower price?
What would happen to supply: Increase
What would happen to demand: Nothing
Scientists developed a way to eliminate cholesterol from eggs?
What would happen to supply: Nothing
What would happen to demand: Increase
A disease made half of all chickens unable to lay eggs:
What would happen to supply: Decrease
What would happen to demand: Nothing
BBI2O Notes Summary: Unit 1: Economics
“Business is the act of negotiating to create a deal.”
Market model: Shortage or Surplus