Sally Sold Seashells By The Seashore

1. Sally Sold Seashells By The Seashore An Introduction to Economics

2. Sally started his own business. • Entrepreneur • Creation • Organization • Risks • Responsibilities

3. Sally’s Seashell Store competed against a similar business namedOliver’s Ocean Originals. • Free Enterpise System • Motivated by Profit (money kept after expenses) • Competition Helps the Consumer • Monopoly, Oligopoly, Perfect Competition

4. Sally sold collected shells andalso offered a guided tour to collect your own shells. • Goods – tangible or physical products • Services – intangible products • Need – required for survival • Want – like to have

5. Sally’s store was a small shack on the beach with tables and bookcases. He hired two kids to collect shells. He also developed a way to locate quality seashells. • Factors of Production • Land • Labor • Capital • Entrepreneurship

6. During tourist season, Sally sells seashells for $2.00 each. He tried to sell them for $3.00, but sales plummeted. • Scarcity – allocation of limited resources for unlimited wants • Demand – the quantity of goods a consumer is willing and able to buy • Elastic Demand – a change in price creates a change in demand • Inelastic Demand – a change in price has little effect on the demand for a product

7. Sally has noticed that he rarelyhas repeat customers. • Diminishing Marginal Utility – people will not buy more than they can reasonably use, regardless of price

8. Sally has seen prices rise during hurricane season when shells are hard to find. He also saw prices drop when a competitor imported shells from the Pacific ocean. • Supply – the amount of a good that producers are willing to provide • Surplus – more supply than needed • Shortage – less supply than needed • Equilibrium – where demand and supply meet

9. I don’t know how this applies to Sally. • Gross Domestic Product (GDP) – total market value of goods and services produced nationwide during a given period of time • Federal Reserve – government agency regulating lending to stimulate the economy • Business Cycle – periodic pattern of expansion and contraction the economy goes through • Inflation – a jump in prices that slow consumer spending • Recession – slowing of spending; the Fed lowers the interest rate to promote spending