The focus of the current event is Factor Markets: Derived Demand for Labor and marginal Cost for Labor (Ch. 14).

Economics can help us understand how to build a business. In this assignment, you will consider what factors of production are needed to open a coffee shop in your local area. Answer each question in a paragraph, being sure to include specifics to your local area and citing at least one piece of research to support your analysis.

1. Where will the shop be opened (small town, suburb, large urban area)? Estimate how much the rent would be for a smaller coffee shop. Loopnet.com is a reliable resource for this. A portion of the lease represents the land the shop is on. Do you believe this cost is reasonable? Why or why not?

2.The coffee shop will be staffed by some workers. This represents the cost of labor. How much is the price of labor (wage) in your local area? You might see signs posted indicating how much jobs pay, or you could search a job board like Monster.com. What is the minimum wage where you are? Do you believe this is a fair wage to work in your coffee shop? Why or why not?

3.A coffee shop uses equipment, also called capital. Think about all the machines in a coffee shop and give list of three you would need to buy. A good place to research is here: Webstaurantstore.comLinks to an external site. How much do the machines cost? How might you get the financial capital (money) to buy them?

4.Based on your initial research, do you think the costs of land, labor, and capital would allow you to eventually turn a profit on the coffee shop? What would increase your chance of profitability?

5.What unexpected economic events might make the shop unprofitable?

REFERENCES NEEDED AS WELL.