economic education for consumers ○ chapter 1 bell work ► write down what you think the...

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


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


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.



KEY TERMSKEY TERMS

values goals needs wants long-term

goals

life-span life span goals life-span plan short-term goals opportunity cost



You’ve Got the Power►Values►Values change►Different people, different values

►Life Values►Work Values►Cultural Values►Social Values►Demographic Values



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



Opportunity Cost►Opportunity cost and decisions

►The value of the next best alternative

►Consider other options►Less money►More time



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.



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



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.



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



Write down a product you have purchased recently? Was it a good decision or one you regretted later?



LESSON 1.2

Make DecisionsObjectiveObjective►Describe each of the five steps in the

decision making process.



KEY TERMKEY TERM

rational buying decision



Decision Making Process►Specify►Search►Sift►Select►Study



Specify►Need or want?►Goals►Values



Search►Plan your search►Avoid impulse purchases

►Examples of impulse buys► Candy► Music► ???



Sift►Look at your options►Look at your opportunity costs



Select►Compare the benefits and costs ►Decide



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?



Describe each of the five steps in the decision making process.



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



•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?


ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1LESSON 1.3

Understand Economic Systems

ObjectivesObjectives►Describe four economic systems.►Explain how demand and supply work.



KEY TERMSKEY TERMS

production resources economics profit

scarcity demand supply equilibrium price



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



Economic Systems►Market economy

►People own the resources and businesses►No government intervention.

►Mixed economy►Has both people and government control

resources and businesses



Demand and Supply►Demand►Supply►Equilibrium




Quantity

y

Pri

ce

Demand curve

x



Quantity

y

Pri

ce

Supply curve

x



100Quantity

y

$1

Pri

ce

Demand curve

Supply curve

x



50 100 150Quantity

y

$1

Pri

ce

Demand curve

Supply curve

$2

Surplus

x



75 100 125Quantity

y

$1

Pri

ce

Demand curve

Supply curve

$0.50Shortage

x


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?



MilkPS3 (at release)iTouch 30GGasoline (at 4 dollars a gallon)Housing (Nation wide)



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



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


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)


Read “Consumer Action” on page 23. Come up with 2 or 3 ideas on how she can become more profitable.



Consumer’s Role in the Economy

ObjectiveObjective►Explain the role of consumers in

determining what is produced in a market economy.



KEY TERMSKEY TERMS

consumer consumer

economics



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)



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



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



How do demand and supply act together in a market economy to set the equilibrium price for a product?



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



•Hand in homework•What are some of your favorite commercials and why? What product are they trying to sell?


ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1LESSON 1.5Advertising and Consumer Decisions

ObjectivesObjectives►Describe different types of advertising.►Explain how you can recognize deceptive

advertising.



KEY TERMSKEY TERMS

advertising puffery



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



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



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



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


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?



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



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



Be a Responsible ConsumerObjectivesObjectives►Identify ways in which your consumer

decisions affect other people.►Explain why you should use resources

responsibly.



KEY TERMKEY TERM

global warming



Consumers in Society►Sharing limited resources

►Limited number of raw materials► Heating Oil► Water

►Protecting public safety►Why do we have laws and punishments?



Using Natural Resources►Resource consuming products►Water►Forest products►The environment►Encourage business responsibility►Dispose of waste responsibly►Respect your neighbors



How can your consumer choices affect the people around you?

What can you do to be a more environmentally responsible consumer?



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



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


economic education for consumers ○ chapter 1 bell work ► write down what you think the...

Documents

cengage learning slide

economic education

consumers chapter

power values values

different values life

important values

responsible consumer

goals opportunity cost