5.2: Starting Your Business

As you start your business, you begin with 1 employee (yourself) and then through the course of the first year you may try to add more employees to see how much production you can achieve.  For example, if you produce something (a pair of shoes, a beanbag chair, etc.) or provide a service (cutting trees, washing cars, etc.) or selling something, you can keep track of the output to know how productive you are.

• Using the chart on page 117 as a model, create a table relating to your specific business:

MARGINAL PRODUCT OF LABOR

Labor	Output	Marginal Product
0	0	--
1
2
3
4
5
6
7
8

• Marginal Product of Labor (p.117): Chart Skills 1 & 2
• What could be a possible reason for having less output after adding additional employees?
• What are Production Costs? (p.119): #1 & 2
• Looking at your particular business:
• What are your fixed costs?
• What are your variable costs?
• Checkpoint (p.120): Why does a closed factory still have production costs?
• Checkpoint (p.122): When should a firm keep a money-losing factory open?
• Production Skills (p.120): #1 & 2
• Section 1 Assessment (p.122): #4, 6, 7