ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
WHAT’S AHEAD
1.1 Decisions, Decisions
1.2 Make Decisions
1.3 Understand Economic Systems
1.4 Consumer’s Role in the Economy
1.5 Advertising and Consumer Decisions
1.6 Be a Responsible Consumer
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.1
Decisions, Decisions
GOALS
►Identify several important values you hold.
►Explain how creating a life-span plan helps you make
better decisions.
►Describe what an opportunity cost is.
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMS
 values
 goals
 needs
 wants
 opportunity cost
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMS
 values – your principles-the standards by which
you live.
 goals – the things you want to accomplish in
your life.
 needs – things you cannot live without.
 wants – things that you would like to have but
can live without.
 opportunity cost – the value of your next best
alternative whenever you make a choice.
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
You’ve Got the Power
►Values
►Values change
►Different people, different values
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Goals
►Needs and wants
►Hopes and dreams
►A life-span plan – a strategy people create to help them
achieve their life-span goals.
►Short-term goals – things you hope to accomplish
within a year.
►Work to reach your goals – knowing your goals is just
the first step. The next step is to plan how to reach
them.
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Opportunity Cost
►Opportunity cost and decisions
► Every decision has an opportunity cost.
►Consider other options
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
What are the various ways values can be
classified?
How can creating a life-span plan help you make
better decisions?
What is opportunity cost? Give an example.
Slide 8
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
What are the various ways values can be
classified?
Values are the principles, or standards, by which you live.
 Life values
 Work values
 Cultural values
 Social values
 Demographic values
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
How can creating a life-span plan help you make
better decisions?
• A life-span plan is a strategy you create to help you
achieve your long-term goals.
• You can use this plan to help you make decisions and
identify the actions to take as you work toward your goals.
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
What is opportunity cost? Give an example.
Opportunity cost is the value of your next best alternative
whenever you make a choice.
Examples:
• go to college or get a job right now
• save for a new car or take a vacation
• go out for a nice dinner or do pizza and a movie tonight
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.2
Make Decisions
GOAL
►Describe each of the five steps in the decision making
process.
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERM
 rational buying decision
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Decision Making Process
►Specify
►Search
►Sift
►Select
►Study
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Specify
►Need or want?
►Goals
►Values
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Search
►Plan your search
►Avoid impulse purchases
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Sift
►Look at your options
►Look at your opportunity costs
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Select
►Compare the benefits and costs
►Decide
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Study
►You can learn important lessons from the results of
your actions
►Would you do the same thing again? If so, why?
►If not, what would you do differently?
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Describe each of the five steps in the decision
making process.
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Describe each of the five steps in the decision
making process.
• Specify: Identify specific need or want; determine your goals
• Search: Gather information about your alternative choices
• Sift: Evaluate your options; consider your opportunity costs
• Select: Make a choice and act on it
• Study: Evaluate the results of your choice
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.3
Understand Economic Systems
GOALS
►Describe four economic systems.
►Explain how demand and supply work.
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMS
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 production
 scarcity
 resources
 demand
 economics
 supply
 profit
 equilibrium price
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Economic Systems
►Traditional economy
►Command economy
►Market economy
►Mixed economy
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Demand and Supply
►Demand
►Supply
►Equilibrium
Slide 25
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Demand Curve
Price
y
Demand
curve
x
Quantity
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Supply Curve
y
Price
Supply
curve
x
Quantity
Slide 27
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Equilibrium Price
y
Supply
curve
Price
Demand
curve
$1
x
100
Quantity
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Surplus Graph
y
Surplus
Price
$2
Supply
curve
Demand
curve
$1
x
50
Slide 29
100
Quantity
150
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Shortage Graph
y
Supply
curve
Price
Demand
curve
$1
$0.50
Shortage
x
75 100 125
Quantity
Slide 30
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
What are the primary characteristics of each of
the four economic systems?
How do demand and supply work together to
determine prices and how much producers will
produce?
Slide 31
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
What are the primary characteristics of each of
the four economic systems?
• Traditional economy: the ways to produce products are
passed from one generation to the next
• Command economy: the government owns most
resources and makes most economic decisions
• Market economy: people, rather than the government,
own the resources and run the businesses
• Mixed economy: a mixture of a market economy with
some aspects of a command economy, for example
Slide 32
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
 How do demand and supply work together to
determine prices and how much producers will
produce?
• Producers are willing to offer more of a product for sale at a
higher price than at a lower price
supplied increases (and price
decreases)
• As price decreases, the quantity
supplied decreases (and price
increases)
Slide 33
Price
• As the price rises, the quantity
Supply
curve
Quantity
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.4
Consumer’s Role in the Economy
GOAL
►Explain the role of consumers in determining what is
produced in a market economy.
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMS
 consumer
 consumer economics
Slide 35
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Making Decisions
in a Market Economy
►Information for the economy
►Prices
►The profit motive
►Consumer economics
►Consumers in charge
►Benefits of competition
►Efficiency and profits
Slide 36
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
How do demand and supply act together in a
market economy to set the equilibrium price for a
product?
Slide 37
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
 How do demand and supply act together in a market
economy to set the equilibrium price for a product?
• Profits result from selling products for more than it costs to make
them
• To earn a profit, businesses must produce products that
consumers buy
• When consumers spend their money, they determine what
products are produced
• At the equilibrium price, consumers are willing and able to buy
the same amount of the product as producers are willing and
able to supply
Slide 38
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.5
Advertising and Consumer Decisions
GOALS
►Describe different types of advertising.
►Explain how you can recognize deceptive advertising.
Slide 39
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMS
 advertising
 puffery
Slide 40
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERMS
 advertising – a paid form of communication
sent out by a business about its product or
service.
 puffery – innocent exaggeration in advertising.
(Note: Puffery is legal, Deceptive advertising is not).
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Types of Advertising
►Brand advertising – designed to cause you to remember a
particular brand name.
►Informative advertising – designed to influence you to buy a
product by educating you about the product’s benefits.
►Comparative advertising – designed to convince you to buy
the advertised product instead of a targeted competing
product.
►Defensive advertising – designed as a counter-attack to
respond to claims made by other companies.
►Persuasive advertising – designed to appeal to your
emotions to influence you to buy.
Slide 42
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Deceptive Ads versus Puffery
►Puffery
►Factually wrong
►Exaggerated claims are legal
►Is it free?
►Protecting yourself from deceptive advertising
Slide 43
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Identify and describe characteristics of each of
the types of advertising presented in this lesson.
How can you recognize and protect yourself from
deceptive advertising?
Slide 44
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Identify and describe characteristics of each of
the types of advertising presented in this lesson.
• Brand advertising: helps consumers to recognize brand name
• Informative advertising: influences buying behavior by
educating the consumer
• Comparative advertising: compares product qualities to
competing products’ qualities
• Defensive advertising: counters competitors’ advertising
claims
• Persuasive advertising: appeals to consumers’ emotions
Slide 45
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
How can you recognize and protect yourself from
deceptive advertising?
• Approach buying decisions in an organized, logical
manner
• Gather information from several sources (in addition to
the advertisement)
• Evaluate the information
• Consider alternative choices
Slide 46
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
LESSON 1.6
Be a Responsible Consumer
GOALS
►Identify ways in which your consumer decisions affect
other people.
►Explain why you should use resources responsibly.
Slide 47
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
KEY TERM
 global warming
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Consumers in Society
►Sharing limited resources
►Protecting public safety
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
Using Natural Resources
►Resource consuming products
►Water
►Forest products
►The environment
►Encourage business responsibility
►Dispose of waste responsibly
►Respect your neighbors
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© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
How can your consumer choices affect the
people around you?
What can you do to be a more environmentally
responsible consumer?
Slide 51
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
How can your consumer choices affect the
people around you?
• The earth’s natural resources are limited and not quickly
replaced
• To be environmentally responsible, use resources in
moderation and recycle or conserve them
Slide 52
© 2010 South-Western, Cengage Learning
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 1
What can you do to be a more environmentally
responsible consumer?
• Consider how your choices affect the use of resources
and their impact on the environment
• Dispose of waste responsibly
• Encourage businesses to act responsibly through your
buying decisions
• Recognize that you live in a world community and act with
consideration toward others
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© 2010 South-Western, Cengage Learning