The Role of the Consumer

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Presentation transcript:

The Role of the Consumer Free Enterprise The Role of the Consumer

Free Enterprise – The Role of the Consumer Consumers do two major things in the marketplace: Decide which Businesses Survive Determine Prices

Role of the Consumer PICK THE WINNER !

The Role of the Consumer – Decide Which Business Survives Consumers pick the Winners Every time consumers make a purchase, they “VOTE” with their dollars. This “voting power” makes consumers powerful in Free Enterprise

Role of the Consumer Determine Prices

The Role of the Consumer – Determine prices Prices are determined much in part from the laws of Supply and Demand Consumers play a major role in Supply and Demand How So…..

The Role of the Consumer – SUPPLY AND DEMAND DEMAND – Consumers willingness and ability to buy a product SUPPLY – Amount of goods manufacturers are willing to make and sell

Role of the Consumer – SUPPLY AND DEMAND As Supply and Demand interact, they create: SURPLUS - Supply is greater than demand SHORTAGE – When supply is less than demand EQUILIBRIUM – When supply equals Demand

Role of Consumer – DEMAND CURVE $ 30 29 Price per Sweater 28 27 QTY 1000 2000 3000 4000 Number of Sweaters Demanded

Role of Consumer – SUPPLY CURVE $ 30 29 Price per Sweater 28 27 QTY 1000 2000 3000 4000 Number of Sweaters Supplied

Role of Consumer – SUPPLY and DEMAND CURVE 1100 1800 2400 $ 3000 3800 3800 3000 -1100 -1800 1200 SHORTAGE 2700 SURPLUS 30 $29.50 SURPLUS 29 Price per Sweater EQUILIBRIUM 28 $27.75 $27.25 27 SHORTAGE QTY 1000 2000 3000 4000 Number of Sweaters Demanded / Supplied