3.02 Fashion
Economics
Economics vocabulary
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Economics: how to meet the unlimited
wants of a society with its limited resources.
Goods: Items physically made by
manufacturers; tangible products.
Services: Acts performed for the consumer;
intangible products.
Consumers: People who use** products.
Customers: People who buy** products.
(might not use it)
Resources
Land, labor, and capital*** resources
that can be used to produce the goods
and services that people consume; also
known as the factors of production.
•Natural resources
•Capital
•Human resources
•Entrepreneurship
Natural resources
Everything contained in the earth
or found in the sea.
Human resources
All the people who work in the
economy.
Capital
The money needed
to start and
operate a business
and the goods
used in the
production of other
goods.
Entrepreneurs
People who are willing risk of starting
their own business
**Opening a boutique
Supply & Demand
 Supply:
The amount of goods
producers are willing to produce
and sell at a given price.
 Demand: The amount of goods
consumers are willing and able to
buy at a given price.
The law of supply and demand
The more people
want a certain
product, the more
producers are
willing to make of
that product
The interaction of supply &
demand…
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People will pay more for goods if they are rare
Companies that produce and sell an only a few
items can charge a higher price for the goods
and make more profit. However, other
companies may begin to produce the product,
increasing supply and causing the price to drop.
***When supply is high, price is low (like bread,
or t-shirts)
 **When
product is in high
demand,
–price increases**
–people will pay higher prices.
 When demand decreases
(people don’t want it), price will
decrease (things go on sale).
 When price increases, people
buy less (demand less**)
 Scarcity:
people want products and
can’t get them
 Opportunity cost: The value of
what is given up when an economic
choice is made. (if you buy that shirt
today, you won’t have the money to buy
lunch tomorrow)
 Utility:
service
Usefulness of a good or
Economic Utilities (Usefulness)
(don’t write down)
Form utility
 Place utility
 Time utility
 Possession utility
 Information utility
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Form utility: Changing materials or
assembling parts to create a useful good.
(**having a jacket sleeve altered)
Place: product available where customers
need it.
Time: product available when it is needed.
Possession: making it easy for the consumer
to own the product. (**how to pay for it)
Information: communicating information
about products. (**Mary Kay shows customers
how to use the products)
Goods: Items physically made by
manufacturers; tangible products.
Consumer goods: Products
useful to consumers.
(**shoes, clothing)
 Industrial goods: Products
used by businesses in
producing goods and
services.
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Convenience goods: Emergency
items, impulse items, or staple
goods usually purchased in small
quantities at frequent intervals with a
minimum of comparison shopping.
Specialty
goods: Goods for which the
consumer has a preference due to
quality, uniqueness, brand identification,
or other specific characteristics.
**like brand name clothing
Shopping
goods:
Merchandise purchased
by the consumer only
after comparison
shopping.
Often expensive items and
price and quality is important.
Services: Acts performed for the
consumer; intangible products.
Consumer services: Acts performed for
the consumer for a fee. (**manicure)
 Industrial services: Acts performed for
businesses for a fee.
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Free-market system
Individuals, not the government,
make important economic
decisions.
•decide how to spend their money.
•determine which products are offered for
sale.
•Sellers may charge any price they desire.
Profit
The money left over after costs,
expenses, and taxes have been
deducted from sales.
• ***The driving force behind
the free-market system
• Determines whether or not a
business will succeed
Competition
A rivalry between businesses to gain as
much of the total sales as possible.
•Helps maintain reasonable prices
•Provides consumers with new and
improved products
•Provides wide selection of products
Types of Competition
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Pure competition
Oligopoly
Monopoly
Direct competition
Indirect competition
Price competition
Nonprice competition
Pure competition
No single company in an industry
is large or powerful enough to
influence or control prices. **tshirts •Many buyers and sellers
•No single buyer or seller controls prices or
number of units sold.
•All products sold are very similar to each
other.
•Companies may enter or exit the industry
without pressure or restraints; the industry is
insignificantly affected when a company
enters or exits.
Oligopoly
A few large, competitive firms
dominate the market. **jeans
•Firms react to the actions of their competitors.
•Laws prevent oligopolies from price setting
among themselves.
•Government may prevent mergers that would
reduce competition.
•Difficult for new firms to enter the industry or
for established firms to leave the industry
Monopoly
No direct competitors; only one
company offers goods or services
for sale and has total control over
products and prices.
•U.S. has no textile/apparel monopolies.
•The government does allow some utilities to
operate as monopolies in industries where it
would be inefficient to have more than one firm.
Direct competition
Retailers that utilize the same type of
business format.
Indirect competition
Retailers that employ different types
of business formats to sell the same
type of goods.
Price competition
Competition
focused on the
selling price of a
product.
*Consumers prefer to buy the products that are lowest in
price.
Nonprice
competition
Competition based on factors that are
not related to price.
•**Quality
•**Customer services
•**Location
•**Reputation
•**Salespeople
Business Cycle
The fluctuations in the economy over
periods of several years.
(don’t write down)
•Prosperity
•Recession
•Depression
•Recovery
Prosperity
•Highest economic growth
•Low unemployment
•High output of goods and
services
•High consumer spending
•Consumers willing to spend
on fashion products***
Recession
•Fewer goods and
services being
produced
•Worker layoffs
•Economic
slowdown**
•Retail sales
decrease
•Rising
unemployment**
•Necessary
products such as
food, housing,
and
transportation
take priority over
fashion products.
•Decrease in
consumer
spending
Depression
•Extremely low
**consumer
spending
•High unemployment
•Drastic decrease in
production of
products
•Poverty** can result.
•Fashion products
are not being
purchased.**
Recovery
•Renewed economic growth and an increase in
output of goods and services
•Reduced unemployment
•Increased consumer spending
•Moderate business expansion**
•Gradual increase in sale of
products**
fashion