market economy terms 2.02 examine purchasing decisions and various products with respect to value,...
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Market Economy Terms
2.02 Examine purchasing decisions and various products with respect to value, service, maintenance and price.
Market Economy
Basic economic decisions are based on the actions of buyers and sellers in the market.
Price
The amount of money given or asked for, when goods or services are bought or sold.
Market or Marketplace
Any place where individuals buy and sell goods and services.
Demand
The amount of goods or services consumers are willing and able to buy.
Law of Demand
Consumers will buy less of an item at a higher price than at a lower price.
Supply
Amount of goods or services that producers will provide.
Law of Supply
The higher the price more producers will supply it and the lower the price fewer producers will supply it.
Surplus
An over supply of a product. Producers are producing more of a product than consumers will buy.
Shortage
An under supply of a product. Consumers are demanding more of a product than producers are producing.
Equilibrium Price
The price at which the amount supplied and the amount demanded come together.
Nondiscretionary Income
Income used to purchase items to meet basic needs
Discretionary Income
Income that is left over after a consumer’s basic needs have been met
Types of Products
Convenience Goods Shopping Goods Specialty Goods
Convenience Goods
Goods consumers buy regularly without spending much effort.
Usually inexpensive
Examples: milk and bread
Shopping Goods
Goods consumers buy after spending time looking around and comparing products.
Usually more expensive than convenience goods
Examples: vehicles and designer clothing
Specialty Goods
Goods that consumers select by brand or company which require a special sales effort.
Usually expensive
Examples: digital cameras, stereo equipment, and perfume
Types of Merchandisers
Department Stores Mass Merchandisers Off-Price and Outlet Stores Limited Line Retailers Superstores/Hyperstores
Department Stores Stores have different departments selling
a variety of products – men’s, women’s, children’s clothing, home furnishings, jewelry, and services
Goods are moderately priced, salespeople are in each dept., special services are available (gift wrapping, delivery), elaborate merchandise displays and may even have a salon
Ex: Macy’s, Nordstrom’s, Saks Fifth Avenue
Mass Merchandisers
Sells a variety of items at reasonable or low prices; often are nationwide stores; practical displays and not always very organized; some service is available
Examples: Target, Sears, Wal Mart
Off-Price Stores Off-price stores usually buy from
producers with surpluses; therefore, carry many manufacturers’ brands or manufacturer’s overruns
Prices are discounted at 20-70% off; merchandise can be slightly imperfect or discontinued; limited service is available
Example: TJ Maxx
Outlet Stores
Outlet stores are operated by the manufacturer and carry only that manufacturer’s brand or an affiliated manufacturer
Examples: Easy Spirit, Carter’s, Peaches and Cream, Corning
Limited Line Retailers
Sell only one kind of merchandise – clothing stores, athletic goods stores, home appliance stores, hardware stores; services vary, selling methods and prices vary
Examples: Limited, GAP, Foot Locker, Best Buy
Superstores/Hyperstores Superstores: Extremely large
(30,000 sq feet), similar to supermarkets, but also sell mass merchandise items like clothing, garden products, and books; no customer services
Hyperstores: Larger than Superstores (200,000 sq feet)
Examples: Kroger, Harris Teeter, Lowes Food Store, Food Lion