ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Bell Work►Write down what you think the attributes
of a successful person are?
© 2010 South-Western, Cengage LearningSlide 11
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
WHAT’S AHEAD1.1 Decisions, Decisions1.2 Make Decisions1.3 Understand Economic Systems1.4 Consumer’s Role in the Economy1.5 Advertising and Consumer Decisions1.6 Be a Responsible Consumer
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.1
Decisions, DecisionsObjectivesObjectives►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 LearningSlide 33
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMSKEY 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 LearningSlide 44
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 55
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Goals►Needs and wants
► 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 LearningSlide 66
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Opportunity Cost►Opportunity cost and decisions
►The value of the next best alternative
►Consider other options►Less money►More time
© 2010 South-Western, Cengage LearningSlide 77
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 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 LearningSlide 88
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 99
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 1010
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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
© 2010 South-Western, Cengage LearningSlide 1111
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Write down a product you have purchased recently? Was it a good decision or one you regretted later?
© 2010 South-Western, Cengage LearningSlide 1212
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.2
Make DecisionsObjectiveObjective►Describe each of the five steps in the
decision making process.
© 2010 South-Western, Cengage LearningSlide 1313
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMKEY TERM
rational buying decision
© 2010 South-Western, Cengage LearningSlide 1414
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Decision Making Process►Specify►Search►Sift►Select►Study
© 2010 South-Western, Cengage LearningSlide 1515
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Specify►Need or want?►Goals►Values
© 2010 South-Western, Cengage LearningSlide 1616
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Search►Plan your search►Avoid impulse purchases
►Examples of impulse buys► Candy► Music► ???
© 2010 South-Western, Cengage LearningSlide 1717
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Sift►Look at your options►Look at your opportunity costs
© 2010 South-Western, Cengage LearningSlide 1818
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Select►Compare the benefits and costs ►Decide
© 2010 South-Western, Cengage LearningSlide 1919
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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?
© 2010 South-Western, Cengage LearningSlide 2020
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Describe each of the five steps in the decision making process.
© 2010 South-Western, Cengage LearningSlide 2121
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 2222
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
•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 LearningSlide 2323
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1LESSON 1.3
Understand Economic Systems
ObjectivesObjectives►Describe four economic systems.►Explain how demand and supply work.
© 2010 South-Western, Cengage LearningSlide 2424
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMSKEY TERMS
production resources economics profit
scarcity demand supply equilibrium price
© 2010 South-Western, Cengage LearningSlide 2525
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Economic Systems►Traditional 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 LearningSlide 2626
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Economic Systems►Market economy
►People own the resources and businesses►No government intervention.
►Mixed economy►Has both people and government control
resources and businesses
© 2010 South-Western, Cengage LearningSlide 2727
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Demand and Supply►Demand►Supply►Equilibrium
© 2010 South-Western, Cengage LearningSlide 2828
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
© 2010 South-Western, Cengage LearningSlide 2929
Quantity
y
Pri
ce
Demand curve
x
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
© 2010 South-Western, Cengage LearningSlide 3030
Quantity
y
Pri
ce
Supply curve
x
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
© 2010 South-Western, Cengage LearningSlide 3131
100Quantity
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$1
Pri
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Demand curve
Supply curve
x
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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50 100 150Quantity
y
$1
Pri
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Demand curve
Supply curve
$2
Surplus
x
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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75 100 125Quantity
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$1
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Demand curve
Supply curve
$0.50Shortage
x
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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?
© 2010 South-Western, Cengage LearningSlide 3434
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
MilkPS3 (at release)iTouch 30GGasoline (at 4 dollars a gallon)Housing (Nation wide)
© 2010 South-Western, Cengage LearningSlide 3535
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 3636
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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
© 2010 South-Western, Cengage LearningSlide 3737
Quantity
Pri
ce
Supply curve
• As the price rises, the quantity supplied increases (and price decreases)
• As price decreases, the quantity supplied decreases (and price increases)
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Read “Consumer Action” on page 23. Come up with 2 or 3 ideas on how she can become more profitable.
© 2010 South-Western, Cengage LearningSlide 3838
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1LESSON 1.4
Consumer’s Role in the Economy
ObjectiveObjective►Explain the role of consumers in
determining what is produced in a market economy.
© 2010 South-Western, Cengage LearningSlide 3939
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMSKEY TERMS
consumer consumer
economics
© 2010 South-Western, Cengage LearningSlide 4040
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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)
© 2010 South-Western, Cengage LearningSlide 4141
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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
© 2010 South-Western, Cengage LearningSlide 4242
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 4343
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
How do demand and supply act together in a market economy to set the equilibrium price for a product?
© 2010 South-Western, Cengage LearningSlide 4444
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 4545
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
•Hand in homework•What are some of your favorite commercials and why? What product are they trying to sell?
© 2010 South-Western, Cengage LearningSlide 4646
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1LESSON 1.5Advertising and Consumer Decisions
ObjectivesObjectives►Describe different types of advertising.►Explain how you can recognize deceptive
advertising.
© 2010 South-Western, Cengage LearningSlide 4747
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMSKEY TERMS
advertising puffery
© 2010 South-Western, Cengage LearningSlide 4848
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Types of Advertising►Brand 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 LearningSlide 4949
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Types of Advertising►Comparative 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 LearningSlide 5050
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 5151
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Deceptive Ads versus Puffery
►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 LearningSlide 5252
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 5353
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 5454
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 5555
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1LESSON 1.6
Be a Responsible ConsumerObjectivesObjectives►Identify ways in which your consumer
decisions affect other people.►Explain why you should use resources
responsibly.
© 2010 South-Western, Cengage LearningSlide 5656
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMKEY TERM
global warming
© 2010 South-Western, Cengage LearningSlide 5757
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Consumers in Society►Sharing limited resources
►Limited number of raw materials► Heating Oil► Water
►Protecting public safety►Why do we have laws and punishments?
© 2010 South-Western, Cengage LearningSlide 5858
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Using Natural Resources►Resource consuming products►Water►Forest products►The environment►Encourage business responsibility►Dispose of waste responsibly►Respect your neighbors
© 2010 South-Western, Cengage LearningSlide 5959
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 6060
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 6161
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
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 LearningSlide 6262