Profit and Incentives
The money a business has left after subtracting its costs from its revenue.
Profit
What is opportunity cost?
The value of the next-best option you give up when making a choice.
What is the term for the goods and services people want to buy?
Demand.
What is a paid message used to promote a product or service?
An advertisement.
What is one way social media influencers make money?
Sponsorships.
A reward, such as a bonus or discount, that encourages someone to take a certain action.
Incentive
You spend $20 on a shirt instead of going to the movies. What is your opportunity cost?
Going to the movies.
What happens to demand when the price of a product decreases, assuming other factors stay the same?
Quantity demanded usually increases.
What is an algorithm on social media?
A system that decides what content users see.
A person who uses social media to influence the opinions or buying decisions of their followers.
Influencer
A business sells a product for $50, and it costs $30 to make. How much profit does it earn per product?
$20
You have two hours to study or play video games. If you choose to study, what is your opportunity cost?
The time you could have spent playing video games.
What is inflation?
A general increase in prices over time.
Why do social media companies collect data about their users?
To personalize content and target advertisements.
The economic concept that explains how the price of a product can rise when many fans want it but only a few are available.
Supply and demand
A company lowers its production costs while keeping its selling price the same. What happens to its profit, assuming sales stay the same?
Profit increases
A farmer uses their land to grow corn instead of wheat. What is the opportunity cost?
The wheat they could have grown.
If a product becomes harder to find but people still want it, what will likely happen to its price?
Its price will likely increase.
How do social media platforms make money from targeted advertising?
They charge businesses to show ads to specific audiences.
The value of the next-best alternative someone gives up when spending time creating social media content instead of working a paid job.
Opportunity Cost
A social media influencer earns extra money for every 1,000 views on a sponsored video. What type of incentive encourages the influencer to attract more viewers?
A final incentive.
A business spends $10,000 on advertising instead of upgrading its equipment. What is the opportunity cost, and how could this affect the business?
The equipment upgrade it gave up, which could have improved production or efficiency.
If the government sets a minimum wage above the market equilibrium wage, what could happen in the labor market?
Some workers may earn higher wages, but employers may hire fewer workers.
How can an algorithm influence consumer spending?
It can repeatedly show users products they may want, encouraging them to buy more.
A business arrangement in which a company pays a social media creator to promote its products.
Brand sponsorship