3E Economics par. 2.2

• Economie
• Middelbare school
• vwo
• Leerjaar 3

Program

Explanation 2.2 (part 1) + assignments

Explanation 2.2 (part 2) + assignments

Check homework 2.1

Lesson objectives

You can explanain what the turnover and total costs are 

You know the difference between fixed and variable costs

You know what is shown on a supply curve and how to draw such a curve

We're starting a business

What kind of a business are we setting upt?

We want to know how much our turnover is.. what do we need to know and how to calculate this?

Turnover

Turnover (or Total Revenue) = sales quantity x selling price
 TR = P x Q

2000 products are sold for € 50
Sales = 2000 products
Total Revenue = € 50 x 200 = € 100.000

Total Profit

Total Revenue = Sales x Selling price
 TR = P x Q

Total profit = Total Revenue - Total Costs

TP = TR - TC

Total Costs (restaurant)

Fixed costs - costs that are not dependant of the number of products produced.

F.e.: rent, insurance

Variable costs - Costs that do depend on the number of produced products. 

F.e.: ingredients of the meals 

Total costs

TC = 2Q + 100

2Q = variable costs, depend on Q (amount of products)
F.e.: costs per pizza are € 2

100 = fixed costs, you have to pay them anyway
F.e.: Loan and rent

A bakery sells 200 loafs of bread and receives € 420 in total. What is correct?

1. Sales is € 420
2. Total profit is € 420
3. Total revenue is 200
4. Total revenue is € 420

A company sells 30 shirts at € 30 per shirt. The total costs are € 420. What is incorrect?

1. Total profit is € 480
2. Sales are 30 shirts
3. Total Revenue is € 900
4. Total profit is € 900

Assignments 

start working on assignments 1 t/m 7

Done? Continue with 8 and further

Supply curve

Demand curve

Supply curve

Supply curve

Supply curve: shows the relationship between price and the quantity supplied

Example of a supply curve: 

Qs = 0,25P – 5

Qs = amount of products offered

P = price of the product in euro’s

• the supply curve will be upward sloping
• the number before p will be positive

How to draw the supply curve?

1. Calculate the price when Qs = 0 
2. Calculate Qs at a higher price than the answer of step 1. 
3. Draw the vertical axis with the price and the horizontal axis with Qs.
   
4. Put 2 dots on the points you calculated at step 1 and 2 and draw the line. 

How to draw the supply curve?

Calculate the price when  Qs = 0  

0,25P - 5 = 0

0,25P = 5

P = 20  
 so ( 0, 20 )

Calculate the Qa at a higher price than the answer in step 1 

0,25 x 80 - 5 = 15

so ( 15, 80 )

Supply curve

The supply curve gives us the amount of products supplied at a certain price.

Qs = 0,25P – 5

(p in €, Qs in number of products)

Assignments

Continue with the assignments from paragraph 2.2

Homework

Discuss homework 2.1

Lesson objectives

You can explanain what the turnover and total costs are 

You know the difference between fixed and variable costs

You know what is shown on a supply curve and how to draw such a curve