UNDERSTANDING ECONOMIC SYSTEMS

CH 1.3

SUPPLY AND DEMAND Lets read pages 19-21 together!

Demand:▪ Quantities of a good or service that consumers are

willing to buy at various prices and time periods Supply:

▪ Quantities of a good or service that producers are willing to sell at various prices and time periods

Equilibrium price: The price at which the quantity supplied exactly

equals the quantity demanded of that product.

Supply and demand graph

CAREER SIMULATION

ECONOMIC TERMS

PRODUCTION: ▪ the creation of goods and services

RESOURCES:▪ The raw materials, labor, knowledge, and equipment

used in production. SCARCITY:

▪ Consumers wants are greater than the resources available

TYPES OF RESOURCES

Human▪ Efforts of humans that add value to products

Natural▪ Limited resources available on the planet

Capital▪ Financial or monetary resources invested to

produce products

TYPES OF ECONOMIES Traditional:

▪ Production is passed through generations▪ Tribes in remote areas

Command:▪ Government owned▪ Companies are told what to sell

Market (Capitalist)▪ People own the businesses▪ Purpose is to generate a profit▪ Here in the U.S.

Mixed▪ Combination of a Command & Market (China)

5 TYPES OF ADVERTISING

CH 1.5

BRAND ADVERTISING

More likely for consumers to remember and know the brand

▪ Examples? Catchy jingles? Funny commercials?▪ Famous Athletes, celebrities?

Cost of brand advertising is a higher price for the product or service▪ Coca-cola spends more money on advertising

than any other product in the world Why does brand advertising raise the price?

celebrities!

Product placement

Putting brand name items in a movie for everyone to see!

Product placement….

How many items do you see?

INFORMATIVE ADVERTISING Consumers will buy the product

based on what the product can do▪ (This is the correct way of consuming!!)

May include testimonial from satisfied costumers▪ Infomercials!

http://www.youtube.com/watch?v=23zGquwJfbw&feature=related

COMPARATIVE ADVERTISING A comparison of one product to

another (competitor) Try to exploit the competitor’s

weakness

comparative advertising

DEFENSIVE ADVERTISING May be in response to a claim made

by a competitor The opposite of Comparative

advertising The wars between Pepsi and Coke in

the 80’s

PERSUASIVE ADVERTISING Ads try to appeal to emotions of the

consumer Their product will make you happy,

successful, popular, etc…

Persuasive advertising