Economics is the study of the steps of the production of products, how they are distributed for selling to the public and how the public responds to buying the product.

Market Price is the price people are willing to pay for a product or service depending upon the supply available and the demand for the product and or service.

Supply is the amount of a product needed or available for the public to buy.

Demand is when the customers need or want a lot of a certain product.

Market place is where people meet to exchange goods and services.

Economics is explained throughout this web site, but we have tried to write an explanation for elementary students. It is a difficult topic to understand, and we have tried to simplify it.

There are several steps to the production, marketing, and selling of a product. A business needs to identify what the public wants to buy and to convince them they can not live without their product.

A producer of a product has to establish his or her price of the product using several criteria. The production cost is based on:

1.labor expenses as hourly wage or salary, health insurance, and taxes,

2. the cost of the materials to produce the product,

3. and the range of profit the producer wants to earn.

But we were curious about how a company decides the market value for pricing an item. The market value is the price a customer will pay for a product, and the quantity of that product a producer is willing to produce for that price. The producers decide on a product and identify a price range they think people are willing to pay for the product. Then the producers decide how many of the product they are willing to produce to sell at each price.

This is how you find the market price using the above graph. The numbers on top of the graph represent the number of potential buyers. In this situation there are 8 customers. Along the side of the graph are the prices that the seller has decided on as possible prices and the amount of profit he or she will earn. The red line is the supply line. For example, the producer will produce 10 items for $2.00, but if you look at the black line,only two customers would buy the item. If nine items were produced to sell at $1.50, four customers would purchase it. The market price is at the intersection of the two lines. If six items were produced, six customers would purchase them. So, if the producer controls the quantity of an item produced to six items, the company would make the most sales and most profit.

The next step of our study was to interview a local craft center in Wolfeboro. We interviewed Mr. and Mrs. Adler from Cornish Hill Pottery to learn more about how they managed their business. They were involved from production to sales. They are potters and make their own pottery to sell. We interviewed this business to learn about the life of a business owner, and more about economics.

Q. How do you know how to price your products?

A. It's a combination of materials, time, and what the market will pay .

Q. How do you manage to supply according to demand?

A. You just have to guess right, but it's not all guessing. You analyze the history of the product. Ex: Sold ten of this last year, try to sell twelve of them this year.

Q. How do you know how much to supply?

A. The same way as in the previous question.

Q. How do you deal with competition?

A. We try to be unique and different than other stores. We are unique. We put the studio in as entertainment as well as shopping.

Q. Does competition effect your market price?

A. Yes, we price our products similarly to our competition.

Q. What is your definition of economics?

A. It's how production and service workers organize themselves.

Q. What kind of marketplace do you own?

A. A pottery store.

Q. Who are you focusing your product to?

A. Tourists and locals, or the gift market.

Q. Why are you focusing your product to tourists and locals?

A. That's who can afford to buy our products.

Our team concluded that economics is very important to running a business. Pricing is crucial, or you won't sell anything. Most gift shops focus mainly on tourists, their main customers. This store bases their prices on labor and materials.

Wolfeboro is full of tourists during the summer, which is why most businesses make more money in the summer than in the winter. It is a short business season. In other words, economics is more than putting an item out to sell.