Entrepreneurs in Mesopotamia Lesson Learning Targets: 1. I can define entrepreneur. 2. I can compare expected benefits with expected costs of new businesses. 3. I can identify whether an entrepreneur is earning a profit or suffering a loss, given simple production cost and selling price data. 4. I can explain that entrepreneurs earn profits when the price they sell their product for exceeds the costs of producing that product. Building Background Knowledge • Do you know anyone who started their own business? • Why do you think that person started his or her own business? • When do you think people first began opening their own businesses? • Let’s add to our knowledge base by reading! “Entrepreneurship in Ancient Mesopotamia”- 5.1 • What is an entrepreneur? Who are some entrepreneurs in the modern world? • Why did entrepreneurship develop in Babylon’s temples? • What risks did rent farmers take on when they chose to become entrepreneurs? • Why did rent farmers choose to rent the land from the temple despite the risks? • What did other entrepreneurs in Babylon do? • What was the social position of entrepreneurs in Babylon? “Entrepreneurship in Ancient Mesopotamia” • What is an entrepreneur? Someone who starts businesses, taking on the risk of organizing productive resources to produce goods and resources • Who are some entrepreneurs in the modern world? Bill Gates, Steve Jobs, Jeff Bezos, Henry Ford • Why did entrepreneurship develop in Babylon’s temples? Temples had a lot of land and did not have enough people to work the land. • What risks did rent farmers take on when they chose to become entrepreneurs? They had to invent some of their own money to buy equipment to farm the land they rented. If crops failed, they might not have enough money to pay rent to the temple and cover the costs of the equipment they had purchased. • Why did rent farmers choose to rent the land from the temple despite the risks? They expected to make money. • What did other entrepreneurs in Babylon do? Some specialized in provide transportation and marketing Some produced and sold food products and textiles. • What was the social position of entrepreneurs in Babylon? They were respected members of the community. Entrepreneurs… • • • • • • are willing to take risks develop new products and start new businesses recognize opportunities like working for themselves accept challenges are innovative Attempt to solve problems by creating new or improved products or ways of doing things • In ancient Babylon entrepreneurs created new ways of: trading, farming and producing goods and services these developments improved the lives of people who lived in Babylon and beyond Entrepreneurs… • compare the expected benefits to the expected costs If the benefits appear to outweigh the costs = start the business If benefits may not exceed the costs = don’t start the business • are risk-takers, if profitable Profit= income entrepreneurs receive in exchange for their skills and risk-taking Profit= total revenues - total costs of business • How do entrepreneurs profit? When products are sold for more than they took to make • How do entrepreneurs lose money? When buyers do not purchase products at prices high enough to cover costs of production Entrepreneurs of Babylon Simulation • 6 equalish groups • Each group = Textile Production Business • Each group will create a textile design and produce one sample unit – On a piece of paper – To distribute to each group • Your supplies and tools Plan carefully before beginning work on sample! Accounting for Supplies Used 5.2 • Textile Production Worksheet= preview • Shekel= ancient measure of weight for gold and silver • Any Questions? Remember the following… • What is an entrepreneur’s goal? – To earn a profit • What is the amount each group expects to earn when it sells each unit? – 45 shekels • What is the amount below which each group must keep its costs of production per unit? – At or below 44 shekels Let’s Get to Work! 1. 2. 3. 4. 5. Plan textile design Pick up resources to complete sample Complete costs table on 5.2 Answer questions 1 – 3 on Activity 5.2 Prepare to share the following: Show textile sample Share calculation of total cost to produce each unit Profits and Losses by Group GROUP Selling Cost per Price per Textile Unit Textile Unit Profit or Loss? Amount of Profit or Loss per Textile Unit Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 FOCUS MIDDLE SCHOOL WORLD HISTORY © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Let’s Do Some Calculating Assume the following: each group produces multiple units to sell across the Babylonian Empire. each unit was produced for exactly the amount each group calculated In reality, this would be decided by consumers’ demand for the textile and willingness to sell at different prices Each group will draw a “Textile Price Card” to determine the price each item will sell for Textile Profit Worksheet 5.4 Directions: Calculate per unit profit and loss Share out: Cost of production Selling price Profit or loss Profits and Losses by Group GROUP Selling Cost per Price per Textile Unit Textile Unit Profit or Loss? Amount of Profit or Loss per Textile Unit Group 1 Group 2 19 35 P 16 15 47 P 32 Group 3 Group 4 Group 5 17 33 P 16 18 45 P 27 20 50 p 30 Group 6 FOCUS MIDDLE SCHOOL WORLD HISTORY © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Let’s Use Our Noggins How many groups earned a per-unit profit? Why did those groups earn a per-unit profit? How many groups suffered a per-unit loss? Why did some groups suffer a per-unit loss? How many groups earned smaller profits than expected? How many groups earned larger profits than expected? Why did those groups earn larger profits than expected? Knowing What You Know Now… How would you have done things differently? How often do you think real entrepreneurs misjudge how much their product will sell for? If entrepreneurs could see into the future, would they start business ventures even if they would suffer a loss? Let’s Review What We Have Learned • Who are entrepreneurs? Risk-takers who draw upon their skills and initiative to launch new businesses with the aim of making a profit • What two things would a smart entrepreneur be sure to compare when deciding whether to start a business? Expected costs and expected benefits • If the expected benefits of a business exceed expected costs of the business, what is an entrepreneur likely to do? Start or invest in the business • Why do entrepreneurs accept risks in organizing productive resources to produce goods and services? They expect to earn a profit. • When do entrepreneurs earn profits? When buyers purchase their products or services at prices higher than the entrepreneur’s costs of production. • When do entrepreneurs suffer losses? When buyers purchase their products or services at prices lower than the entrepreneur’s costs of production. • What do we mean wen we say entrepreneurs are innovative? They attempt to solve problems by developing and marketing new or improved products and services.