In this case the supply gets higher and the price gets lower. When supply gets too high for the demand, business owners drop prices in order to attract consumers. Businesses work hard to make enough sales to cover their costs and then make a profit . Businesses also must try to keep their costs as low as possible in order to make a profit. One of the highest costs of providing a product or service is the cost of workers.
Human capital is the economic term for tho people that produce a product or service.
An increase in the amount of work produced by the workers without an increase in pay leads to an increase in productivity for the business. The resulting high productivity keeps the costs per item low and helps increase profits for the company. This activity is designed to encourage students to think about business using economics perspectives and language. Read the following case, and then, in small groups, discuss the questions at the end of the story using the economics terms explained on the previous page. In 1999 the U S economy was experiencing prosperity, and many businesses were experiencing a problem with finding enough workers.