Consumer and the Market Unit 3: Standard 8

Learning Target: (17) I can determine how the relationship between consumers and the market can affect the economy of the U.S.

- CONSUMER “A person who buys or uses products and services.”

- MARKET The act or an instance of buying and selling.

- SUPPLY The quantity of a commodity that is in the market and available for purchase.

- DEMAND The desire to purchase, coupled with the power to do so.

- GOODS “Products that are manufactured and that consumers can buy and own.”

- SERVICE “Work that does not produce an actual product, but which consumers can buy.”

- SCARCITY The problem of limited resources.

- OPPORTUNITY COST The value of an alternative good or service that a company or country has chosen not to produce in order to specialize in something else.

- TRADE-OFF DECISION MAKING The exchange of one thing for another of more or less equal value, especially to affect a compromise.

- STOCK MARKET A particular market where stocks and bonds are traded; stock exchange

What is the relationship between consumers and the market?

The relationship is cyclical – Consumers buy products they demand from the market – Money gained from purchase allows the market to produce more supply

How can this relationship affect the economy of the U.S.?

Sales tax and income tax help the government provide agencies that regulate the market. – Example: food and drug agencies

Critical Thinking: Explain how the stock market impacts the marketplace.

So… how does the stock market impact the marketplace? The rise and fall of stocks determine how confident people are in spending money. It helps businesses speculate on whether consumers are buying or saving. This determines the amount of goods made for the market

Critical Thinking: Relate the ideas of scarcity, opportunity cost, and trade-off decisions to the consumer’s role in the marketplace.

Relate the ideas of scarcity, opportunity cost, and trade-off decisions to the consumer’s role in the marketplace. Scarcity creates demand, which drives prices up. The rise in prices due to scarcity increases the opportunity cost in trade-off decision making. The higher the price the less likely the consumer will make pay for the opportunity cost.

Critical Thinking: How can the housing market affect the overall market?

How can the housing market affect the overall market? Pro Banks provide low interest rate + people confident in the economy = more house being bought/build More houses being bought/built allows banks and construction companies to hire more workers More employees = more goods and services needed = more employees Con Banks give out too many loans to people who default (fail to make payments) = Banks take home Too many repossessed new homes means the bank will have to raise interest rates to make money back Higher interest rates = less people buy/build = less employees

Learning Target: (18) I can explain the effects of government policies on the market.

- FREE ENTERPRISE Principle that business owners in a free market are allowed to run their businesses in any way they see fit, with little government interference.

- POLICY A course of action adopted and pursued by a government, ruler, political party, etc.

- REGULATIONS A law, rule, or other order prescribed by authority, especially to regulate conduct.

How do government policies affect the market? Force higher taxes on certain businesses (ex. oil companies) to force them to change what they produce. They accomplish this by providing tax cuts and incentives. (ex. producing green energy products) Government spending = higher taxes/borrowing = discourages investments or starting new businesses Influence interest rates by the amount of money printed. – Lower interest rates = more buying; higher = less buying Regulations: – Pro: protects the consumer from bad food, unclean conditions, prevents workplace discrimination – Con: too many regulations can be costly in the start up of new business, rise in minimum wage = less profit for business (can really hurts small business)

Critical Thinking: Provide an example of how government policies affect the market?

Today’s Learning Target: (20) I can differentiate between the types of economies.

- MARKET ECONOMY An economic system in which individuals are free to compete, to earn a living, to earn a profit, and to own property.

- COMMAND ECONOMY An economic system in which the government makes all the economic decisions.

- TRADITIONAL ECONOMY An economic system based on how economic activity has been carried out in the past.

- MIXED ECONOMY An economic system that mixes elements of many different systems together.

Critical Thinking: List a country for each type of economy.