Consumer Education

1. Consumer Education Unit 1

2. Economic Terminology • Economics-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.

3. Wants/Needs • Needs-items you must have to survive • Ex: Food, Water, Air, Shelter, Clothes • Wants-items that make life much more enjoyable. • Ex: Chocolate, TV, Internet

4. Goods/Services • Goods-physical items that are produced for the consumer. • Ex: Car, loaf of bread • Services-actions that are performed for consumers. • Ex: haircut, oil change

5. More Economic Terminology • Scarcity-resources are scarce while the needs they must satisfy are never ending. • Basic Economic Problem

6. Decision Making Model • 1. 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)

7. Consumer Terminology • Opportunity Cost-what you give up in order to get something else • Monopoly-only one supplier exists-corners the market

8. Law of Supply • When 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. 

9. Law of Supply $ Number of items

10. Law of Demand $ Number of Items

11. Law of Demand • When 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.

12. Where Supply & Demand Meet • Equilibrium Price-where supply and demand curves meet. Suppliers and Consumer

13. Economic Resources Natural resources-things that come from nature Ex. oil, coal, water, trees Human resources –people who are the workers Ex. Work force, labor Capital resources –things that are needed to create and operate a business. Ex. $$, buildings, technology

14. Types of Economic Systems • Traditional-the same that it has always been • Command-the government is in charge and makes all decisions • Market-the consumers get to make all decisions • Mixed-a combination of command and market.

15. US Economy Pieces • Freedom of Choice • Private Property • Private Enterprise • Limited Government Control

16. Economic Indicators • GDP Gross Domestic Product-Goods and services produced within this country in one year.

17. Economic Indicators • CPI 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

18. Economic Conditions • Recovery-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.

19. Economic Conditions • Prosperity-is a time period where all economic signs are good. • Unemployment is low, • Money is being spent • Businesses are flourishing

20. Economic Conditions • Recession-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-offs • GNP or GDP does no rise to an acceptable rate

21. Economic Conditions • Depression-A major economic slowdown, longer lasting and more serious than a recession. • Demand decreases sharply • Prices plummet • Many businesses fail • Unemployment soars

22. Costs of Advertising • Print-magazine, newspaper • TV-Super Bowl Ad $3.5 million for 30 second spot-2012 • Internet-pop up ads, ads on sites

23. Types of Advertising • Brand Advertising-the promoting of a certain name or brand of product 1.Jingles/slogans-are songs, statements that are created to help remember the name or product • EX: 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

24. Types of Advertising • Informative-is the process of educating you on the benefits of the product and convincing you need this product. EX: Infomercials

25. Types of Advertising • Comparative-is the comparing of two products and convincing you that your product is better. • EX: Coke vs. Pepsi

26. Types of Advertising • Defensive-is the counter attacks that may be made by other companies. • EX: Best Hamburger • McDonalds, Burger King, Wendy’s

27. Types of Advertising • Persuasive-is the creation of a desire for a product that plays on your emotional factors. • EX: perfume ads, make-up

28. Deceptions • Trading up-you plan on buying a lower prices item and sales person pressures you into a higher price unit. • EX: computer

29. Deceptions • Inflated Sale Price-increase prices then call it a sale when they lower the prices.

30. Deceptions • Suggested Retail Price-is a higher price than any retailer could hope to get. • EX: Jewelry

31. Deception • Loss 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, eggs

32. Fraudulent Advertising • Bait & 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.

33. 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