Transcript PowerPoint Slides - School District 308

Chapter 1
The Engine That Runs The
Economy
Chapter 1.1: Decisions,
Decisions
Grocery Store Products
Consumer Decisions
As
a consumer, you have the
power to choose what you
want to buy and where you
want to buy it.
You can choose not to buy
from businesses whose
products you don’t like or
whose prices are too high.
Bell Ringer 1
Think
of a business in the area
that has shut down.
1. Write down the name of the
business
2. Brainstorm then write down
some reasons why you think
that business shut down.
Location,
service, products, etc.
Consumer Decisions
You
have the power to
make so many different
decisions that you may
wonder… Where do I start?
Knowing your values is a
good place to begin.
Values
 Principles
live by
 Varies
time
and standards in which you
by person and can change over
 Life
Values- things that are important
to you in your life.
 Example:
friends
Spending time with family and
Classification Of Values

Work Values: career/job


Cultural Values: heritage


Dress in clothes that shows heritage
Social Values: community


Working for business that respects the environment
Working to keep community clean
Demographic Values: where you live


Values will change at different stages in your life.
Living in city vs. suburbs
Vocab…
 Goals-
things you want to accomplish
 Needs Wants-
things you cannot live without
things you desire but do not need
to survive
Vocab..
Opportunity Cost- value of next best
alternative whether you make a choice
 When making a decision, sometimes there
are things you need to sacrifice and give
up.
Example: You’ve earned $60 for allowance
and want to buy a new video game but
also wanted new Nike Shoes. You can only
afford to buy one of the two items… you
must make a decision.

Vocab Continued..
Long-term
goals- things you
want to achieve over a period
of years during your lifespan
Life-span-
death
time from birth to
Your Life Span
Life Span Chart
You
are going to make a life span
chart for your life.
 Include
any milestone you can remember
throughout your life as well as things you
plan to do in the future.
Sports played
Traveling
School milestones/ events
Clubs/activities
Future Plans: college, marriage, house,
bucket list
Chapter 1.1 Activity
 Review
Vocab
 Identify 2 Short-term goals
 Identify 3 long-term goals
Chapter 1.2: Make
Decisions
Decision Making Process
5





S’s
Specify: Identify needs and wants you are
trying to fulfill.
Search: Gather Information about
alternative choices
Sift: Evaluate Options. Consider opportunity
cost
Select: Make a choice
Study: Evaluate result
My Car Buying Example
 Trying
to decide between buying a used Honda
civic and a brand new Honda civic.
 Specify- Need a reliable car to get me to and
from NIU. Good gas mileage, sharp looking,
power locks and windows, appealing to the eye.
 Search- Go to the car dealer and look at
options.
 Sift- Choose between options and consider
monthly payments
 Select- 2009 Honda Civic- cheaper payments
 Study- Happy with my decision 
Decision Making Process
 Rational

Choice made in an organized, logical
manner
 Impulse


Buying Decision
Buying Purchase
Purchase made on a whim, without using a
decision making process.
Buying without considering alternatives.
Decision Making Scenario

Sammie is an Oswego senior and has to make
a decision of which college to attend next
school year. Sammie knows she wants the
option of coming home on some weekends
so she would like a school that is not too far
away. Also, her parents are willing to pay for
college as long as the price is within reason
(middle to low end). Sammie is considering
majoring in education, but still wants to
explore her options, so it is important that the
school has a variety of majors. Last, Sammie is
a very involved student at OHS and wants to
get involved with extracurricular activities
such as clubs, sports, and attending sporting
events.
Help Sammie through the
decision making process…

Use The Decision Making Process






Specify- Identify Needs and Wants
Search- Gather Info
Sift- Evaluate options
 Select 3-4 colleges Sammie should attend
Write criteria next to each college
Select
 Choose A college
Study
Chapter 1.3
Understanding Economic
Systems
Economic Systems
Every nation has an
Economic System.
• Economic System
•
• The
way a nation uses
resources to produce
goods and services.
Production
 Creation

of goods and services.
Manufacturing products such as cars or
pencils.
Resources
•
Things that are used to create
other goods and services
Human Resources: skills, training,
abilities people have
• Nonhuman Resources: raw materials,
tools, and manufactured products
such as: oil, tractors, and lumber used
to make goods and services
•
Economics
•
•
Study of how we make use of
our resources.
There are 4 types:
Traditional Economy
• Command Economy
• Market Economy
• Mixed Economy
•
Traditional Economy
•
•
•
•
Ways to produce products are
passed from one generation to
the next
Parents teach children how to
produce goods and services.
Children then pass those skills onto
their children.
Example: hunt, weave baskets
and create jugs to carry water
Command Economy
•
•
•
Government owns most resources and makes
most of the economic decisions
Government determines prices, styles, colors
and even amounts of products produced.
2 Types:
•
•
•
Socialism: System based on public or
collective ownership of the means of
production.
•
Workers efforts are valued
•
Working class is exploited by the ruling class
Communism: System based on communal
ownership and the absence of class.
Examples: China, Cuba, North Korea
Market Economy
•
•
•
•
People, rather than the government,
own the resources and run the
businesses.
Businesses are free to choose which
products to produce and how to
produce them. Set own prices.
Purpose is to earn a profit
Profit= Price-Cost
Mixed Economy
•
•
•
Mixture of a market economy and a
command economy.
United States is a Mixed economy
US Government sets limits on what some
businesses and individuals may do
•
•
•
Sets rates public utility companies can charge
consumers
Cant discard hazardous waste in rivers
Business cant make false claims about their
products
WHAT IS SCARCITY?
•
•
•
Occurs when consumers wants are
greater than resources available to
satisfy those wants.
People cannot obtain as much of
something as they want, without
making sacrifice or bearing a cost.
Scarcity defines a relationship –
between the amount of something
we want and the amount that is
available.

WHAT IS SCARCITY?
SCARCITY NECESSITATES CHOICE; THEREFORE TRADE-OFFS
CANNOT BE AVOIDED
 Hey
guys... check out
these ipads I found…
Does anyone want one?
 How
should we
solve this DILEMMA?
•
WHAT IS A TRADE-OFF?
Trade-off is a
choice between
alternatives that
reveals the
opportunity cost
of selecting one
alternative over
the other.
WHAT IS OPPORTUNITY COST?
•
Opportunity cost is the most highly
valued sacrificed alternative; the
value of the “next-best” choice.
Demand
Quantity
of goods and services
that consumers are willing and
able to buy at various prices
during a given time period.
Law of demands states that
consumers will purchase more
of a product at a lower price
than a higher price.
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Demand Example
 Tacos
are $1 and you choose to buy
4 tacos a week.
 Your demand for tacos would be 4
per week.
 What happens if price increases to $2
per taco?
 You may only buy 2 tacos per week.
 Demand for tacos may go down as
prices increase
Supply
 Quantity
of a product that producers
are willing and able to make available
for sale at various prices over a given
time.
 Law of supply says that producers are
willing to offer more of a product for sale
at a higher price than a lower price.
 When prices rise, quantity supplied
increases
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Equilibrium
•
•
•
•
•
Price at which the quantity supplied equals
quantity demanded of that product.
At equilibrium price, consumers are willing
and able to buy the same amount of
products as producers are willing and able
to supply.
How much are you, the buyer, willing to
pay?
How much are you, the seller, going to
charge?
Come to an agreement
Equilibrium Price
Demand=
Negative
Slope
Supply=
Positive
Slope
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Surplus vs. Shortage
•
•
Surplus is when the quantity of
products exceed the amount
demanded by consumers.
Shortage is when consumer
demand more products than
producers are able to
produce.
Critical Thinking
Read
the pet shop
scenario and answer the
2 questions that follow.
Utopia
Story Of Atlantis
Greek
Mythology
Poseidon, the god of the ocean and
waters received this island of paradise.
 The first king of the island was Atlas which
was Posiedon’s son…. Naming the Island
Atlantis.
 The people of Atlantis, for the first few
generations, obeyed laws and Poseidon.

Story Of Atlantis Continued…

But as the divine nature of Poseidon was getting
more and more diluted in them, they began
loosing their pure spirit and engaged in pursuing
wealth and power. This invoked the wrath of Zeus,
the king of all Greek gods, who decided to punish
the unrighteous people of Atlantis.
Here the story ends, either because it got lost or
because it was never finished. All we know is that
the island and its whole culture disappeared
under the ocean and has been lost ever since.
Story Of Atlantis Assignment


Think about the type of society you would like to
establish and the needs of your colony.
Study the list of applicants




Think about the type of economy you want to have





You can only take 15 people with you
You must choose 1 person from each cluster
There must be an equal number of men and women (8 and
8 including you)
Tradition
Command
Market
Mixed
Make a List of tools, supplies, etc that you would need
and want to take with you for the 2 year period.
Bell Ringer 2
Story Of Atlantis Questions
 What
challenges did you face in
being the “leader” of this colony?
 What
strategies did you use in
deciding who you should “pick” or
take with you.
 Was
it easy to determine laws that
should be used on the island?
Making
Decisions In A
Market
Economy
Chapter 1.4
Market Economy
 Consumers
are free to buy
 Producers are free to sell
 Both parties get what they want
Information For The Economy
 Merchant

Retailer
 Manufacturer


Person who makes the merchandise for
stores
When the quantity is low, retailers receive
more product from manufacturer.
Consumer

Anyone who buys or uses products


Consumer Economics


EVERYONE is a consumer!
The study of the role consumers play in an
economic system.
Consumer Sovereignty


To be in charge
Consumers choices determine what goods and
services are produced.
Competition
 Contest
among sellers to win customers.
 Competition
exists when several
companies offer similar products for sale.
 Example:

Apple iPhones.
AT&T, Sprint, Verizon
Profitable Companies
 1.
Sell products consumers want to buy
 2. Sell products at a price consumers are
willing to pay.
 3. Taking in more money from sales than
the company spends to produce
product.
Logos
Slogans
Company Development
 Get
into groups of 2-3
 Think of your own business






Come up with a name for your business
Identify what product or service is being
offered
Come up with a Logo for your company
Create a slogan to advertise your product
Identify ways you would promote your
company
You may create this on poster board or on
the computer!
Advertising and
Consumer
Decisions
Chapter 1.5
Advertising
A
paid form of
communication sent out by
a business about its
products or services.
Ads try to influence and
persuade consumers to buy
their product.
Costs of Advertising
Businesses
advertise
because they believe it will
help them earn profit.
The cost of advertising is
built into the price you pay
when you buy goods and
services.
Benefits of Advertising
 Consumers
benefit from advertising
because increased sales generated by
advertising allow businesses to produce a
higher volume of products.

Volume=
production cost =
prices for consumers
lower
6 types of advertising
 Brand
Advertising
 Informative Advertising
 Comparative Advertising
 Defensive Advertising
 Persuasive Advertising
 Deceptive Advertising
Brand
Purpose
is to cause you to
remember a particular brand
name.
The advertiser hopes that if you
remember the brand name,
you will be more likely to buy
the product when you shop.
 Use
of Jingles and Slogans
Informative
 Designed
to influence you to buy a
product by educating you about
the products benefits.
 Often used for complex or highly
technical products that consumers
may not understand, such as
computers or automobiles.
Comparative
Tries
to win you by comparing its
product’s qualities to those of a
competing product.
Purpose is to get you to buy the
advertised product instead of the
targeted competing product.
Defensive
 Responds
to claims made by other
companies.
 If
the producer of brand X detergent
claims its product removes stains better
than Brand Y, the producer of Brand Y
may respond by pointing out its product is
color-safe and will not cause color fading
after repeated washing the way brand X
does.
Persuasive
Designed
to appeal to your
emotions to influence you to
buy, but it doesn’t provide
much useful information.
These ads influence you that if
you buy their product you will
be happier, more successful, or
more satisfied.
Deceptive Advertising




Deliberately designed to mislead you
Comparing your product to that of a
competitor without scientific studies to
substantiate your claims could lead to
charges of deception.
Saying two out of three people prefer your
pizza when you have no studies to
substantiate the claim crosses the line to
deception.
Illegal
Puffery

Puffery




Innocent exaggeration
Puffery serves to "puff up" an exaggerated image
of what is being described
This is done to make your product look better than
the competition
Puffery claims are subjective and are a matter of
opinion.



A hair salon may say it offers "the best" service, but
"best" is a matter of opinion. But if the salon claims
that is has won more awards than any other salon in
the city, this is something that can be measured -- it is
an objective claim and not puffery.
Puffery often uses superlatives such as "best," "fastest,"
"tastiest" and "freshest," for instance.
Legal
Identify the type of advertisement
1. Fresh Deodorant- you’ll feel Fresh all day long!
2. Wagner’s Extra Crunchy chips are the best for
dips!
3. Al’s Healthy Subs have fewer calories than
Nero’s Subs
4. Nero’s Subs have 50% more calories than Al’s
subs because they are 50% larger than Al’s Subs.
Don’t be fooled by false claims!
5. Your neighborhood Bank- Our low interest
home-equity loan offers no closing costs and no
application fees.