Lesson 7: Resources and Hiring Decisions for Entrepreneurs

In this lesson students will learn about economic resources and understand how entrepreneurs make hiring decisions. 

Economics

Entrepreneurs must make hiring decisions by weighing the marginal benefit of hiring a person against the marginal cost of doing so. In this lesson, students will participate in an activity where they produce wheat to demonstrate diminishing marginal productivity as more workers are added. Students will use this activity, along with additional information, to better understand how an entrepreneur determines the optimal amount of a resource (such as labor) to utilize.

Objectives:

After completing this lesson students will be able to:

• identify key economic resources (natural, human, and capital) used in entrepreneurship and explain their roles in business operations.
• analyze the relationship between marginal productivity and hiring decisions by applying economic principles to a hands-on wheat production activity.
• evaluate hiring decisions by comparing marginal revenue product (MRP) and marginal resource cost (MRC), and justify optimal hiring choices for a coffee shop based on economic reasoning.

Voluntary National Content Standards in Economics

• Standard 13: Income
  • Income for most people is determined by the market value of the productive resources they sell. What workers earn primarily depends on the market value of what they produce. 
• Standard 14: Entrepreneurship
  • Entrepreneurs take on the calculated risk of starting new businesses, either by embarking on new ventures similar to existing ones or by introducing new innovations. Entrepreneurial innovation is an important source of economic growth.

 Concepts

Cost-benefit analysis, entrepreneurship, labor markets, resources