Role of Producers & Consumers<br /> in a Market Economy<br />EPF2e. How Costs & Revenue Affect Profit & Supply<br />
Profit is <br />an incentive and reward for business owners. <br />to survive, a business must earn a profit. <br />2<br />
Essential question:<br />What is the difference between cost & price?<br />3<br />
Cost and Price<br />Cost – is the money spent for the inputs used (e.g. labor, raw materials, transportation, energy) to p...
Essential question:<br />What is the difference between revenue and profit?<br />5<br />
Revenue and Profit<br />Revenue  - is the income generated by the sale of goods and services<br />	Revenue = price x quant...
Essential question:<br />How is profit calculated?<br />7<br />
Profit Formula<br />Profit is the amount remaining when all costs are subtracted from all revenues.<br />Profit = Total Re...
Essential question:<br />How can changes in the costs of production affect profits and the price of the goods or services ...
Essential question:<br />How do changes in costs of production affect the quantity of a good or service that will be produ...
When costs of inputs rise:<br />A. profit will fall<br />B. or the price of the good or service will be increase and sales...
When costs of inputs decrease:<br />Profits can increase<br />Or the price of the good or service can be decreased and sal...
Supply<br />Refers to the quantity of a good or service that will be brought o market at every price at a given time<br />...
Summary<br />Rising costs tend to decrease profits and lead to higher prices.<br />Falling costs tend to increase profits ...
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Epf2e costs revenues profit and supply

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Epf2e costs revenues profit and supply

  1. 1. Role of Producers & Consumers<br /> in a Market Economy<br />EPF2e. How Costs & Revenue Affect Profit & Supply<br />
  2. 2. Profit is <br />an incentive and reward for business owners. <br />to survive, a business must earn a profit. <br />2<br />
  3. 3. Essential question:<br />What is the difference between cost & price?<br />3<br />
  4. 4. Cost and Price<br />Cost – is the money spent for the inputs used (e.g. labor, raw materials, transportation, energy) to produce a good or service<br />Price – is the amount consumers pay for a good or service<br />4<br />
  5. 5. Essential question:<br />What is the difference between revenue and profit?<br />5<br />
  6. 6. Revenue and Profit<br />Revenue - is the income generated by the sale of goods and services<br /> Revenue = price x quantity<br />Profit - is the amount remaining when all costs are subtracted from all revenues<br /> Profit = Total Revenue – Total Cost<br />6<br />
  7. 7. Essential question:<br />How is profit calculated?<br />7<br />
  8. 8. Profit Formula<br />Profit is the amount remaining when all costs are subtracted from all revenues.<br />Profit = Total Revenue – Total Cost<br />8<br />
  9. 9. Essential question:<br />How can changes in the costs of production affect profits and the price of the goods or services produced?<br />9<br />
  10. 10. Essential question:<br />How do changes in costs of production affect the quantity of a good or service that will be produced?<br />10<br />
  11. 11. When costs of inputs rise:<br />A. profit will fall<br />B. or the price of the good or service will be increase and sales may decrease<br />For example, when the cost of lumber goes up, homebuilder profits will fall or the price of houses will go up<br />11<br />
  12. 12. When costs of inputs decrease:<br />Profits can increase<br />Or the price of the good or service can be decreased and sales may increase<br />For example, when the costs of lumber goes up, homebuilder profits will fall or the price of houses will go up<br />12<br />
  13. 13. Supply<br />Refers to the quantity of a good or service that will be brought o market at every price at a given time<br />When cost of production rises, supply will decrease<br />When cost of production decreases, supply will increase<br />13<br />
  14. 14. Summary<br />Rising costs tend to decrease profits and lead to higher prices.<br />Falling costs tend to increase profits and lead to lower prices.<br />A change in the cost of production influences how much will be supplied. <br />14<br />

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