1. Bell Work
Write down what you think the attributes of a successful person are?
© 2010 South-Western, Cengage Learning

2. CHAPTER 1 CONSUMERS The Engine That Runs the Economy
Economic Education for Consumers
4/17/2017
CHAPTER 1 CONSUMERS The Engine That Runs the Economy
WHAT’S AHEAD
1.1 Decisions, Decisions
1.2 Make Decisions
1.3 Understand Economic Systems
1.4 Consumer’s Role in the Economy
1.5 Advertising and Consumer Decisions
1.6 Be a Responsible Consumer
Chapter 1

3. LESSON 1.1 Decisions, Decisions
Objectives
Identify several important values you hold.
Explain how creating a life-span plan helps you make better decisions.
Describe what an opportunity cost is.
© 2010 South-Western, Cengage Learning

4. KEY TERMS values goals needs wants long-term goals life-span
life span goals
life-span plan
short-term goals
opportunity cost
© 2010 South-Western, Cengage Learning

5. You’ve Got the Power Values Values change
Different people, different values
Life Values
Work Values
Cultural Values
Social Values
Demographic Values
© 2010 South-Western, Cengage Learning

6. Goals Needs and wants Hopes and dreams A life-span plan
Ipod: need or want?
McDonald’s: need or want?
Hopes and dreams
A life-span plan
BHAG (Big Hairy Audacious Goals)
Short-term goals
Work to reach your goals
© 2010 South-Western, Cengage Learning

7. Opportunity Cost Opportunity cost and decisions Consider other options
The value of the next best alternative
Consider other options
Less money
More time
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8. Checkpoint 1.1 What are the various ways values can be classified?
How can creating a life-span plan help you make better decisions?
What is opportunity cost? Give an example.
© 2010 South-Western, Cengage Learning

9. Checkpoint 1.1 answers
What are the various ways values can be classified?
Values are the principles, or standards, by which you live.
Life values
Work values
Cultural values
Social values
Demographic values
© 2010 South-Western, Cengage Learning

10. Checkpoint 1.1 answers
How can creating a life-span plan help you make better decisions?
A life-span plan is a strategy you create to help you achieve your long-term goals.
You can use this plan to help you make decisions and identify the actions to take as you work toward your goals.
© 2010 South-Western, Cengage Learning

11. Checkpoint 1.1 answers What is opportunity cost? Give an example.
Opportunity cost is the value of your next best alternative whenever you make a choice.
Examples:
go to college or get a job right now
save for a new car or take a vacation
go out for a nice dinner or do pizza and a movie tonight
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12. Bell Work
Write down a product you have purchased recently? Was it a good decision or one you regretted later?
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13. Objective LESSON 1.2 Make Decisions
Describe each of the five steps in the decision making process.
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14. KEY TERM rational buying decision
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15. Decision Making Process
Specify
Search
Sift
Select
Study
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16. Specify Need or want? Goals Values
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17. Search Plan your search Avoid impulse purchases
Examples of impulse buys
Candy
Music
???
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18. Sift Look at your options Look at your opportunity costs
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19. Select Compare the benefits and costs Decide
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20. Study You can learn important lessons from the results of your actions
Would you do the same thing again? If so, why?
If not, what would you do differently?
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21. Checkpoint 1.2
Describe each of the five steps in the decision making process.
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22. Checkpoint 1.2 answer
Describe each of the five steps in the decision making process.
Specify: Identify specific need or want; determine your goals
Search: Gather information about your alternative choices
Sift: Evaluate your options; consider your opportunity costs
Select: Make a choice and act on it
Study: Evaluate the results of your choice
© 2010 South-Western, Cengage Learning

23. Bell Work Hand in homework
Write down how you think companies come up with a price to charge for a product. What consideration do they have to make?
© 2010 South-Western, Cengage Learning

24. LESSON 1.3 Understand Economic Systems
Objectives
Describe four economic systems.
Explain how demand and supply work.
© 2010 South-Western, Cengage Learning

25. KEY TERMS production resources economics profit scarcity demand supply
equilibrium price
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26. Economic Systems Traditional economy Command economy
Produce products passed from one generation to another
Did the U.S. ever have this type of economy?
Command economy
Government owns most resources
Makes most economic decisions
© 2010 South-Western, Cengage Learning

27. Economic Systems Market economy Mixed economy
People own the resources and businesses
No government intervention.
Mixed economy
Has both people and government control resources and businesses
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28. Demand and Supply Demand Supply Equilibrium
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29. Demand Curve y Demand curve Price x Quantity
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30. Supply Curve y Supply curve Price x Quantity
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31. Equilibrium Price y Supply curve Demand curve Price $1 x 100 Quantity
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32. Surplus Graph y $2 Supply curve Demand curve Price $1 x
Quantity
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33. Shortage Graph y Supply curve Demand curve Price $1 $0.50 x
Quantity
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34. Checkpoint 1.3
What are the primary characteristics of each of the four economic systems?
How do demand and supply work together to determine prices and how much producers will produce?
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35. Shortage, Surplus or Equalibrium
Milk
PS3 (at release)
iTouch 30G
Gasoline (at 4 dollars a gallon)
Housing (Nation wide)
© 2010 South-Western, Cengage Learning

36. Checkpoint 1.3 answers
What are the primary characteristics of each of the four economic systems?
Traditional economy: the ways to produce products are passed from one generation to the next
Command economy: the government owns most resources and makes most economic decisions
Market economy: people, rather than the government, own the resources and run the businesses
Mixed economy: a mixture of a market economy with some aspects of a command economy, for example
© 2010 South-Western, Cengage Learning

37. Checkpoint 1.3 answers
How do demand and supply work together to determine prices and how much producers will produce?
Producers are willing to offer more of a product for sale at a higher price than at a lower price
As the price rises, the quantity supplied increases (and price decreases)
As price decreases, the quantity supplied decreases (and price increases)
Supply curve
Price
Quantity
© 2010 South-Western, Cengage Learning

38. Bell Work
Read “Consumer Action” on page 23. Come up with 2 or 3 ideas on how she can become more profitable.
© 2010 South-Western, Cengage Learning

39. LESSON 1.4 Consumer’s Role in the Economy
Objective
Explain the role of consumers in determining what is produced in a market economy.
© 2010 South-Western, Cengage Learning

40. KEY TERMS consumer consumer economics
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41. Making Decisions in a Market Economy
Information for the economy
Exchanges provide vital information to make the economy work.
What information can be gathered by a purchase?
Prices
Three choices (lower price, convince customer to pay higher price, stop production)
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42. Making Decisions in a Market Economy
The profit motive
Reduce Costs
Change Price
Increase Quantity of Products Sold
Consumer economics
Adam Smith (consumer sovereignty)
You are in charge
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43. Making Decisions in a Market Economy
Benefits of competition
Why is competition good?
Efficiency and Profits
Profitable companies are:
Selling products that are wanted
Selling products that people will pay for
Making more revenue than expenses
© 2010 South-Western, Cengage Learning

44. Checkpoint 1.4
How do demand and supply act together in a market economy to set the equilibrium price for a product?
© 2010 South-Western, Cengage Learning

45. Checkpoint 1.4 answer
How do demand and supply act together in a market economy to set the equilibrium price for a product?
Profits result from selling products for more than it costs to make them
To earn a profit, businesses must produce products that consumers buy
When consumers spend their money, they determine what products are produced
At the equilibrium price, consumers are willing and able to buy the same amount of the product as producers are willing and able to supply
© 2010 South-Western, Cengage Learning

46. Bell Work Hand in homework
What are some of your favorite commercials and why? What product are they trying to sell?
© 2010 South-Western, Cengage Learning

47. LESSON 1.5 Advertising and Consumer Decisions
Objectives
Describe different types of advertising.
Explain how you can recognize deceptive advertising.
© 2010 South-Western, Cengage Learning

48. KEY TERMS
advertising
puffery
© 2010 South-Western, Cengage Learning

49. Types of Advertising Brand advertising Informative advertising
Get you to remember a particular brand name.
Use of jingles or slogans and past benefits.
Usually more expensive product because of a lot of advertising
Informative advertising
Focuses on benefits of the product
© 2010 South-Western, Cengage Learning

50. Types of Advertising Comparative advertising Defensive advertising
Tells you why the product is better than another.
20% more, cheaper, more efficient.
Defensive advertising
Often used to respond to claims made by other companies
Politicians love these
© 2010 South-Western, Cengage Learning

51. Types of Advertising Persuasive advertising
Designed to appeal to your emotions to influence you
Does not provide much information
SPCA
Benefits and costs of advertising
280 Billion spent each year
Informs more people so they buy your product
© 2010 South-Western, Cengage Learning

52. Deceptive Ads versus Puffery
Innocent exaggeration
“fish story”
Factually wrong
Exaggerated claims are legal
Is it free?
No such thing as a free lunch.
Protecting yourself from deceptive advertising
Use the decision making process we talked about last week.
© 2010 South-Western, Cengage Learning

53. Checkpoint 1.5
Identify and describe characteristics of each of the types of advertising presented in this lesson.
How can you recognize and protect yourself from deceptive advertising?
© 2010 South-Western, Cengage Learning

54. Checkpoint 1.5 answers
Identify and describe characteristics of each of the types of advertising presented in this lesson.
Brand advertising: helps consumers to recognize brand name
Informative advertising: influences buying behavior by educating the consumer
Comparative advertising: compares product qualities to competing products’ qualities
Defensive advertising: counters competitors’ advertising claims
Persuasive advertising: appeals to consumers’ emotions
© 2010 South-Western, Cengage Learning

55. Checkpoint 1.5 answers
How can you recognize and protect yourself from deceptive advertising?
Approach buying decisions in an organized, logical manner
Gather information from several sources (in addition to the advertisement)
Evaluate the information
Consider alternative choices
© 2010 South-Western, Cengage Learning

56. LESSON 1.6 Be a Responsible Consumer
Objectives
Identify ways in which your consumer decisions affect other people.
Explain why you should use resources responsibly.
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57. KEY TERM
global warming
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58. Consumers in Society Sharing limited resources
Limited number of raw materials
Heating Oil
Water
Protecting public safety
Why do we have laws and punishments?
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59. Using Natural Resources
Resource consuming products
Water
Forest products
The environment
Encourage business responsibility
Dispose of waste responsibly
Respect your neighbors
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60. Checkpoint 1.6
How can your consumer choices affect the people around you?
What can you do to be a more environmentally responsible consumer?
© 2010 South-Western, Cengage Learning

61. Checkpoint 1.6 answers
How can your consumer choices affect the people around you?
The earth’s natural resources are limited and not quickly replaced
To be environmentally responsible, use resources in moderation and recycle or conserve them
© 2010 South-Western, Cengage Learning

62. Checkpoint 1.6 answers
What can you do to be a more environmentally responsible consumer?
Consider how your choices affect the use of resources and their impact on the environment
Dispose of waste responsibly
Encourage businesses to act responsibly through your buying decisions
Recognize that you live in a world community and act with consideration toward others
© 2010 South-Western, Cengage Learning