Cookie Economics

A visit to Dr. Lucy’s cookie factory

Learn about…

• How an order for cookies (demand) leads to making just the right amount (supply).

• How different types of resources are needed to make a product and operate a business.

• How cost, price, and profit work.• How supply and demand lead to scarcity or

surplus.

Sales order

How many cookies must be made?

• Dr. Lucy’s has an order for 1,280 packs of cookies (demand). There are 4 cookies in each pack.

• How many cookies must be made (supply)?

How many cookies on a tray?

• How many cookies are in each row on a cookie tray?• How many rows are on a tray?• So, how many cookies are on each tray?

How many cookies on a rack?

• How many trays fit on a rack?

• How many cookies are on a tray?

• How many cookies are on a rack?

• Do we need to make 2 or 3 racks to fill an order for 5,120 cookies?

How many shipping boxes must be sent?

• 16 cookie packs go in each shipping box.• 40 shipping boxes go on each shipping pallet.• How many cookie packs go on each pallet?• How many pallets do we need to send for our order of 1,280

cookie packs?

Invoice

Resources, cost, profit

Fill in examples (see next page) cost

Human Resources $0.18

Natural Resources $0.20

Capital Resources $0.14

total cost to make a cookie pack $0.52

price per pack to the store $0.70

WHAT IS THE PROFIT FOR A COOKIE PACK?

3 types of resourcesname each type

• Human Resources• Natural Resources• Capital Resources

Scarcity and Surplus

• Supply and Demand• Cost is related to supply and

demand

• Scarcity• Scarcity is when there is more

demand and less supply• Cost goes up when a resource is

scarce

• Surplus• Surplus is when there is more

supply and less demand• Cost goes down when a resource is

available in surplus

• When were these cookie resources scarce?

SUGAR used in all cookies US cents per

poundJune 2012 16.30July 2013 29.50March 2014 23.77

COCOA used to make certain cookies US dollars

per tonNovember 2012 $1,967.31August 2013 $3,064.33March 2014 $2,359.11

NATURAL GAS used to heat ovens

US dollars per 1000 cubic meters

June 2012 $172.85November 2013 $115.20March 2014 $72.00