Differentiate between cost and retail price.
DefinitionDifferentiation should include definitions of cost and retail. It should emphasize that cost is what the business pays for a product and retail is what the business sells the product for. It should also include examples of each from the fashion industry.
- What is meant by the term profit margin? How is profit margin determined?
- Does the difference between cost and retail equal a business's profit? Why, or why not?
- Why are the concepts of cost and retail important to a fashion entrepreneur?
- What is costing?
- What is a break-even point?
- What is the basic equation used to determine profit?
Other Related Standards
Economics and Personal Finance Standards of Learning
The student will demonstrate knowledge of basic economic concepts and structures by
- describing how consumers, businesses, and government decision makers face scarcity of resources and must make trade-offs and incur opportunity costs;
- explaining that choices often have long-term unintended consequences;
- describing how effective decision making requires comparing the additional costs (marginal costs) and additional benefits (marginal benefits);
- identifying factors of production;
- comparing the characteristics of market, command, tradition, and mixed economies; and
- identifying Adam Smith and describing the characteristics of a market economy.
The student will demonstrate knowledge of the price system by
- examining the laws of supply and demand and the determinants of each;
- explaining how the interaction of supply and demand determines equilibrium price;
- describing the elasticity of supply and demand; and
- examining the purposes and implications of price ceilings and price floors.