Consumer Education

Unit 1Consumer EducationEconomic TerminologyEconomics-a social science that examines how societies use scarce resources to produce and distribute goods and services that satisfy peoples wants and needs.

Consumers- people who make purchases to help run and stimulate the economy.Wants/NeedsNeeds-items you must have to survive

Ex: Food, Water, Air, Shelter, ClothesWants-items that make life much more enjoyable.

Ex: Chocolate, TV, InternetGoods/ServicesGoods-physical items that are produced for the consumer.

Ex: Car, loaf of breadServices-actions that are performed for consumers.

Ex: haircut, oil change

More Economic TerminologyScarcity-resources are scarce while the needs they must satisfy are never ending.

Basic Economic ProblemDecision Making Model1. Define the problem.2. Identify the choices.3. Evaluate the advantages/disadvantages of choices.4. Choose.5. Act on your choice.6. Review your decision. (most important)Consumer TerminologyOpportunity Cost-what you give up in order to get something else

Monopoly-only one supplier exists-corners the marketLaw of SupplyWhen the price of a product goes up, the supply will go up

Suppliers set it

When the price goes down, the supply will generally go down. Law of Supply $Number of itemsLaw of Demand$Number of ItemsLaw of DemandWhen the price of a product goes down, demand for that product will generally go up.

When the price goes up, the demand goes down.

Set by consumers.

Where Supply & Demand MeetEquilibrium Price-where supply and demand curves meet. Suppliers and Consumer

Economic ResourcesNatural resources-things that come from natureEx. oil, coal, water, treesHuman resources people who are the workersEx. Work force, laborCapital resources things that are needed to create and operate a business.Ex. $$, buildings, technology

Types of Economic SystemsTraditional-the same that it has always beenCommand-the government is in charge and makes all decisionsMarket-the consumers get to make all decisionsMixed-a combination of command and market.US Economy PiecesFreedom of Choice

Private Property

Private Enterprise

Limited Government ControlEconomic IndicatorsGDP Gross Domestic Product-Goods and services produced within this country in one year.Economic IndicatorsCPI Consumer Price Index-Measures the changes in prices over time of a specific group of goods and services. The groups are placed into market baskets which include over 200 categories.

Unemployment Rate-measures the people who are able and willing to work and are unable to find it

Economic ConditionsRecovery-A period of time where prices are on the rise when not all the prices are on the rise. People who are on a fixed income are affected by inflation.

Too much growth rapidly can cause inflation.

Economic ConditionsProsperity-is a time period where all economic signs are good. Unemployment is low,

Money is being spent

Businesses are flourishingEconomic ConditionsRecession-A period of time where a significant decline in the economy. Usually lasts 6 months to a year.Economy produces more than people can consume.Business profits go down which results in lay-offsGNP or GDP does no rise to an acceptable rate

Economic ConditionsDepression-A major economic slowdown, longer lasting and more serious than a recession. Demand decreases sharplyPrices plummetMany businesses failUnemployment soars

Costs of AdvertisingPrint-magazine, newspaper

TV-Super Bowl Ad $3.5 million for 30 second spot-2012

Internet-pop up ads, ads on sites

Types of AdvertisingBrand Advertising-the promoting of a certain name or brand of product1.Jingles/slogans-are songs, statements that are created to help remember the name or productEX: Like a good neighbor, State Farm is There.Benefits-are the qualities that make you want to buy the product.-EX: Dependable, reliable, good quality

Types of AdvertisingInformative-is the process of educating you on the benefits of the product and convincing you need this product.

EX: Infomercials

Types of AdvertisingComparative-is the comparing of two products and convincing you that your product is better.

EX: Coke vs. Pepsi

Types of AdvertisingDefensive-is the counter attacks that may be made by other companies.

EX: Best Hamburger

McDonalds, Burger King, WendysTypes of AdvertisingPersuasive-is the creation of a desire for a product that plays on your emotional factors.

EX: perfume ads, make-upDeceptionsTrading up-you plan on buying a lower prices item and sales person pressures you into a higher price unit.

EX: computerDeceptionsInflated Sale Price-increase prices then call it a sale when they lower the prices.

DeceptionsSuggested Retail Price-is a higher price than any retailer could hope to get.

EX: Jewelry DeceptionLoss Leader-have one product you price extremely low to get customers into the store and hopefully they will buy more once in the store.

EX: Milk, bread, eggsFraudulent AdvertisingBait & Switch-the process of promising an item that you will not sell or do not have.

Fraud-the seller lies about the products abilities, ingredients, or worthiness.

Pyramid Scheme-a scam that is built on getting people to buy in to it and it pays you to get more. Telephone Fraud/Internet Scams-if it is too good to be true it is a scam-if ask for credit card # or social security do not give out.-must buy something to get free item.-refuse to send written details about the deal-must act now to take advantage of deal