REVIEW

• what are ways producers try to increase productivity?• What is the difference b/w specialization and division of labor?• How does using specialization and division of labor lead to more

production and better quality?• Summarize the difference between the cottage industry and factory

industry.• What is the difference between an invention and an innovation?• What is robotics?• What is automation?• What is agribusiness?• Summarize the difference between a skilled and unskilled worker?• What is the difference between an blue collar job and a white collar job?

Vocabulary

• Investment- Using resources that could be used immediately for the purpose of gaining a greater benefit later.

• Law of Diminishing Returns- The amount of benefit/output decreases when a changing variable input is added to a fixed output.

Warm up?

• What is an investment?• Using resources that can bring you immediate

benefits for the purpose of gaining greater benefits in the future is an investment.

An example of financial investment is when people buy stock

1. Selling laptops at discount prices and producing so many of them so as to still make a huge profit is an example of what?

A. Assembly line technologyB. Adequate business organizationC. The practice of mass productionD. The application of automation

2. Of the following, who would most likely earn the highest wage/salary?

A. An uneducated blue collar workerB. A skilled white collar workerC. Someone who graduated high school and has very little

additional trainingD. Someone who works as a hired hand on a farm

EQ: HOW CAN INCREASED INVESTMENT IN CAPITAL GOODS AND HUMAN CAPITAL LEAD TO HIGHER QUALITY AND LOWER PRICES?

Resources & Investment

Investment in Goods

• Capital goods – Products used to make other

goods or provide services.– Investing in capital goods

allows workers to do more work in a given timeframe • Productivity

• Consumer goods – Items purchased for final use.– Ex: ipod or a toaster

• Recycling can increase investment.

Investment through Education

• When laborers invest in education/training, they will more likely have a higher income.

• Investments are made when the likely return is considered more valuable than the otherwise immediate gratification.

How much to Invest? • By comparing the cost of

investment and estimated future benefits businesses can decide how much money to spend on investments.

• Producer Price Index (PPI)– Maintained by US Gov’t– Measures the average

changes in price for different goods

– Helps to estimate the costs of goods producers may buy

Input vs. Output

• Opportunity costs of investment– Not using that money to

produce more goods to be sold

– The opportunity cost of investment can be found by comparing input and output

Costs of Investment • The opportunity cost of

investment (lost production) can be found by comparing the ratio of output vs. input.– Input is all of the factors of

production that go into making a good.

– Output is simply the amount of the good being made.

Law of diminishing returns• When the amount of a

variable input (input whose amount can change) is added to a fixed input (input that is unchanging) the amount of output decreases– Ex: Increasing the amount of

chefs (variable input) in a kitchen (fixed input)

• This is also true for consumers– Ex: Each additional slice of

pizza results in less satisfaction

GRAPHIC ORGANIZER

EQ: HOW CAN INCREASED INVESTMENT IN CAPITAL GOODS AND HUMAN CAPITAL LEAD TO HIGHER QUALITY AND LOWER PRICES?

reflection• Why do people and businesses make investments?• Why would a business invest in capital goods?• Why would employers invest in their workers

education level?• What do businesses use to figure out how much to

invest?• How do producers find the opportunity cost of

investment?• Summarize the law of diminishing returns.

Stock Market

• Choose three stocks and for each answer the following questions:

1. What is the current price of your stock?2. Has the price of your stock gone up or down since yesterday?3. If you owned 100 shares of stock how much money would

you make in dividends?4. If you bought 50 shares of stock at the low price of the year

and sold the shares at the high price for the year, how much $ would you make?

Closing?

• Why do people and businesses make investments?