UNDERSTANDING ECONOMIC SYSTEMS CH 1.3 UNDERSTANDING ECONOMIC SYSTEMS

SUPPLY AND DEMAND Lets read pages 19-21 together! Demand: Supply: Quantities of a good or service that consumers are willing to buy at various prices and time periods Supply: Quantities of a good or service that producers are willing to sell at various prices and time periods Equilibrium price: The price at which the quantity supplied exactly equals the quantity demanded of that product.

Supply and demand graph

CAREER SIMULATION

ECONOMIC TERMS PRODUCTION: RESOURCES: SCARCITY: the creation of goods and services RESOURCES: The raw materials, labor, knowledge, and equipment used in production. SCARCITY: Consumers wants are greater than the resources available

TYPES OF RESOURCES Human Natural Capital Efforts of humans that add value to products Natural Limited resources available on the planet Capital Financial or monetary resources invested to produce products

TYPES OF ECONOMIES Traditional: Command: Market (Capitalist) Mixed Production is passed through generations Tribes in remote areas Command: Government owned Companies are told what to sell Market (Capitalist) People own the businesses Purpose is to generate a profit Here in the U.S. Mixed Combination of a Command & Market (China)

CH 1.5 5 TYPES OF ADVERTISING

BRAND ADVERTISING More likely for consumers to remember and know the brand Examples? Catchy jingles? Funny commercials? Famous Athletes, celebrities? Cost of brand advertising is a higher price for the product or service Coca-cola spends more money on advertising than any other product in the world Why does brand advertising raise the price?

celebrities!

Product placement Putting brand name items in a movie for everyone to see!

Product placement…. How many items do you see?

INFORMATIVE ADVERTISING Consumers will buy the product based on what the product can do (This is the correct way of consuming!!) May include testimonial from satisfied costumers Infomercials!

http://www.youtube.com/watch?v=23zGquwJfbw&feature=related

COMPARATIVE ADVERTISING A comparison of one product to another (competitor) Try to exploit the competitor’s weakness

comparative advertising

DEFENSIVE ADVERTISING May be in response to a claim made by a competitor The opposite of Comparative advertising The wars between Pepsi and Coke in the 80’s

PERSUASIVE ADVERTISING Ads try to appeal to emotions of the consumer Their product will make you happy, successful, popular, etc…

Persuasive advertising