1. Role of a Consumer in a Free Enterprise System
Mrs. Wilson
Career & College Prep
Rocky Point High School

2. Quick Review Our economy is which of the following?
Command
Traditional
Market/Capitalism
What are producers?
What are consumers?
Complete this sentence…
Everyone is a ______________. (producer/consumer)

3. Quick Review
What is the basic economic problem referred to that means that consumer’s wants are unlimited and that resources are limited?
What is the quantity of goods and services that producers are willing and able to provide?

4. Quick Review
What is the willingness and ability of consumers to purchase goods and services at certain prices?
What does the term “equilibrium price” mean?

5. Utility
This is the term economists use to describe the satisfaction consumers receive from using or owning a good or service
For example, owning in-line skates may bring a particular consumer twice as many “utils” as owning a bicycle

6. Consumer Power
The consumer has the ultimate power in a free enterprise system
Buying decisions direct the production of goods and services
Determine what will be produced and at what price
When buying, they are casting $$ votes for its continued production

7. Producer Power They ALSO have power in a free enterprise system
They use advertising and other marketing strategies to induce consumers to want products
Advertising
Communication of product information through mass media to increase demand
Informative and give facts
Can be false and misleading

8. Parts of a Free Enterprise System
INFORMED CONSUMERS
COMPETITION
PURCHASING POWER

9. Competition Rivalry among sellers
Occurs when there is more than one seller of a good or service
Monopoly only one seller
Price Fixing is an illegal agreement among competitors to sell a good or product at a set price

10. Competition Healthy competition keeps prices down
Sometimes the government will grant a monopoly
One power company (LIPA/CON ED) to serve a geographic area
Governments regulate to avoid “gouging”

11. Questions… Do you buy American products first? Why or why not?
Do you agree that consumers have the right to purchase the best value, regardless of who makes the product?

12. Purchasing Power
The value of money, measured in the amount of goods or services it can buy
Purchasing power goes up & down with the economy

13. Purchasing Power Inflation Recession
When prices are generally rising in the economy, purchasing power decreases
Recession
When production, employment and income are declining. People lose their jobs cannot buy as many goods.
Overall loss to our purchasing power in the economy

14. Purchasing Power Transfer payments
Government shifts purchasing power my making these payments
Government grants to some citizens paid with money collected from other citizens
Can you name some?

15. Informed Consumers
You should know your rights and responsibilities in the marketplace
When consumers make wise decisions, they system works to weed out inferior products and keep prices at an acceptable level
When consumers do not act responsibly, prices increase

16. Question…
What would you do if you received a pay raise or earned an increase in allowance ?

17. Three Basic Economic Questions
What will be produced?
What the people want
By whom will it be produced?
Entrepreneurs
For whom will it be produced?
People who can afford it

18. Review…
Tell me one thing that you remember from today’s presentation on our economy
Don’t forget to raise your hand!