D. The Role of the consumer

Q. 1 Consumption habits tell businesses what goods and services consumers want, when they want them, where they want them, and how much they are willing to pay for them. Businesses use this information, along with their own research, to provide goods and services in sufficient quantities to satisfy consumer demands.

Q. 2 Increased competition for consumer dollars means businesses have to work harder to meet consumers’ needs for the products they want at the price they want in the way they want them. If a business does not meet these needs, consumers will go elsewhere.

Q.3 Products can become obsolete because consumers no longer need them or because new or improved products have replaced them. Manual typewriters and 8-track cassettes are examples or products that are now obsolete.

Q.4 When setting a retail price, producers need to consider the cost of producing a product as well as the price they believe consumers are willing to pay for it. This means that similar products will often be in a similar price range.

Q.5 A customer is someone who patronizes a particular business. A consumer has the power to choose where to buy goods and services and how much to pay for them, which is known as consumer purchasing power.

E. Consumer influence Item: Cars More variety in types of vehicles available as consumers are looking for different sizes of cars depending on their lifestyles (e.g., minivans vs. sports cars) and the development of new features (e.g. GPS, seat warmers, MP3 players Item: Jeans Different styles, colours, lengths, fits have become available as consumers try to keep up with fashion trends

Item: Cereal The large variety of cereals means that competition is high, which has allowed consumers to influence the retail price. Item: Pop Diet, calorie-free, and sugar-free versions of pop have been introduced to meet the consumers demands for no-calorie and no-sugar alternatives to regular pop.

Item: Fast food With obesity becoming an epidemic, consumers are seeking healthier fast-food options, which has led many fast-food restaurants to add healthier options to their menus. Item: Cellphones Increased competition among cellphone companies has led them to offer similar rate plans as well as a variety of styles, colours, features, and sizes of cellphones

Item: Event Tickets As consumers increasingly use the Internet for purchases, the need to line up for event tickets has been eliminated

G. Chapter Notes: Starting a business QUESTION 1 Entrepreneurs are self-confident,. Have a flair for innovation, are able to work alone, and are skilled at managing others.

Question 2 When starting a business, it is important to consider the needs and wants of consumers. It is also important to identify competition and plan how you will attract customers to your business instead of your competitors’. You will also need to consider how consumers make buying decisions.

Question 3 1. Develop “new and improved” goods 2. Seek customer approval by promoting its current products 3. Create and promote trends

QUESTION 4 If a lot of financial resources are tied up in inventory, there is less money available to invest in other things that may generate income for the business.

QUESTION 5 Step 1: Determine what decision has to be made. Step 2: Identify the alternatives. Step 3: Evaluate the advantages and disadvantages of each alternative. Step 4: Make a decision and take action. Step 5: Evaluate the decision.

H. Activity: needs and wants Product: Cellphone Need, Want It could be a need or want. It is necessary for some people to be in constant reach for business purposes for financial survival, For others, it is a convenient way to keep in touch. Product: Concert tickets Want You may want to see the concert, but your well-being does not depend on it.

Medication to control high blood pressure Need High blood pressure is a high risk factor for heart disease, and therefore, medication to control it is necessary for survival Plumbing tools for a plumber These tools are required to earn income, which is required for financial survival. Vehicle to attend school Need, Want It could be a need or want. It is a need if there is no transportation alternative.

Bag of chips Want It is a want, because although you need food for survival, a bag of chips is not required for healthy living

2. EXPLAIN THE IMPORTANCE OF ECONOMIC SYSTEMS An economic system is a way of dealing with the selection, production, distribution, and consumption of goods and services in society. Government and business work together to foster activity and growth in the marketplace. Economic systems are designed to allow countries and businesses to make the most of the resources they have and sometimes to develop new resources that will allow them to expand economically.

Q1 Canada – 52.7% Romania – 41.9% Jamaica – 39.6%

Q2 Comparatively, Canada has a small percentage in agriculture. All three have the most working in services. Services predominate in Canada and Jamaica. Canada has the most developed economy, followed by Jamaica and Romania.

Q3 Canada is able to export more commodities because it has more economic resources (raw resources and finished goods) and a larger labour force. Canada is more economically developed and diversified.

Q4 Although a country may be able to produce a particular product for export, it may specialize in only one type of this product and may still need other varieties imported. (Eg. Canada – cars and car parts

Q5 The large number of imports and exports demonstrates the interdependence of businesses in all countries.

L. Demand, supply, and price Q1 The law of demand states that demand goes up as prices come down, and comes down as prices go up. Q2 To create demand, consumers must be aware of the good or service. There must be an ample supply of the good or service available to establish prices that are reasonable and competitive. The good or service must also be conveniently located for the consumer to purchase.

Q3 Changes in consumer income affect demand such that, when people’s incomes increase, they tend to buy more. People want things that are fashionable or trendy, this increase demand for those items. People who believe that prices will increase or their income will increase, will buy in anticipation of these two events. If prices or income are to decrease, demand will decline. Changes in population will increase or decrease demand.

Q4 The law of supply states that supply goes up when prices go up, and comes down when prices go down. Q5 The cost of production and, to some extent, the price that consumers are willing to pay for a good or service are conditions that affect supply.

Q6 Changes in the number of producers Changes to the price of a good Technological improvements Producers’ expectations for future economic conditions and consumer demand can increase or decrease production and supply Supply may increase when production costs are lower and decrease when production costs are higher

Q7 When consumer demand for a good or service is high while the supply is low, prices will tend to be high. When consumer demand for a good or service is low and the supply is high, prices will tend to be low.