Economics of Marketing

Economic Basics

• Economics - study of the choices and decisions that affect making, distributing, and using goods and services

• Unlimited needs and wants but limited resources

Gross Domestic Product

• Value of all good and services produced within the country

• Helps business make decisions

• Free enterprise system– Allows business to make own decisions

Characteristics of Free Enterprise

• Profit

• Risk

• Competition– Price Competition

• Demand elasticity and available substitutes

– Non-Price Competition

Property Ownership

• Copyrights– Intellectual property

• books, films, video games, music

• Patents– Protecting products for 20 years

• Trademarks– Words, names, symbols, sounds

U.S. Patent and Trademark Office

Forms of Business Ownership

• Proprietorship—business owned and run by one person– Advantages: easiest form of business to start and

end; few legal requirements; sole control over all business decisions; receives all profits; income is taxed as part of personal income

– Disadvantages: responsible for all debts of the business; no shelter from creditors

Forms of Business Ownership

• Partnership—business owned and controlled by 2 or more people– Advantages: owners are responsible for key

decisions; partners share profits; written partnership agreement

– Disadvantages: owners liable for debts; each partner is responsible for decisions made by all other partners; partnership is dissolved by death or withdrawal of partners

Forms of Business Ownership

• Corporation—separate legal entity formed by documents filed with a state.– Advantages: owned by one or more shareholders;

managed by a board of directors; offer shares of stock to acquire capital; protect the liability of stockholders to only the amount of money they have invested

– Disadvantages: expensive to form; board of directors have to approve dividends; more records are required; more laws regulate operations

Other Forms of Ownership

• Limited liability partnership (LLP)

• Joint venture

• S-corporation

• Limited liability company (LLC)

• Nonprofit corporation

• Cooperative

• Franchise

Economic Impact

• How is York affected by the addition of the York Revolution?

York Revolution

• Hotels

• Restaurants

• New jobs - means more money for York

• More business for local suppliers to the stadium

• Other community programs available