1. CHAPTER 1 CONSUMERS The Engine That Runs the Economy
Economic Education for Consumers
4/24/2017
CHAPTER 1 CONSUMERS The Engine That Runs the Economy
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
Chapter 1

2. 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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3. KEY TERMS values goals needs wants opportunity cost
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4. 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.

5. You’ve Got the Power Values Values change
Different people, different values
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6. 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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7. Opportunity Cost Opportunity cost and decisions Consider other options
Every decision has an opportunity cost.
Consider other options
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8. Checkpoint 1.1 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.
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9. Checkpoint 1.1 answers
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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10. Checkpoint 1.1 answers
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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11. Checkpoint 1.1 answers 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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12. GOAL LESSON 1.2 Make Decisions
Describe each of the five steps in the decision making process.
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13. KEY TERM rational buying decision
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14. Decision Making Process
Specify
Search
Sift
Select
Study
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15. Specify Need or want? Goals Values
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16. Search Plan your search Avoid impulse purchases
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17. Sift Look at your options Look at your opportunity costs
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18. Select Compare the benefits and costs Decide
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19. 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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20. Checkpoint 1.2
Describe each of the five steps in the decision making process.
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21. Checkpoint 1.2 answer
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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22. LESSON 1.3 Understand Economic Systems
GOALS
Describe four economic systems.
Explain how demand and supply work.
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23. KEY TERMS production resources economics profit scarcity demand supply
equilibrium price
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24. Economic Systems Traditional economy Command economy Market economy
Mixed economy
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25. Demand and Supply Demand Supply Equilibrium
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26. Demand Curve y Demand curve Price x Quantity
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27. Supply Curve y Supply curve Price x Quantity
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28. Equilibrium Price y Supply curve Demand curve Price $1 x 100 Quantity
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29. Surplus Graph y $2 Supply curve Demand curve Price $1 x
Quantity
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30. Shortage Graph y Supply curve Demand curve Price $1 $0.50 x
Quantity
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31. Checkpoint 1.3
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?
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32. Checkpoint 1.3 answers
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
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33. Checkpoint 1.3 answers
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
As the price rises, the quantity supplied increases (and price decreases)
As price decreases, the quantity supplied decreases (and price increases)
Supply curve
Price
Quantity
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34. 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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35. KEY TERMS consumer consumer economics
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36. 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
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37. Checkpoint 1.4
How do demand and supply act together in a market economy to set the equilibrium price for a product?
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38. Checkpoint 1.4 answer
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
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39. LESSON 1.5 Advertising and Consumer Decisions
GOALS
Describe different types of advertising.
Explain how you can recognize deceptive advertising.
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40. KEY TERMS
advertising
puffery
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41. 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).

42. 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.
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43. Deceptive Ads versus Puffery
Factually wrong
Exaggerated claims are legal
Is it free?
Protecting yourself from deceptive advertising
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44. Checkpoint 1.5
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?
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45. Checkpoint 1.5 answers
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
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46. Checkpoint 1.5 answers
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
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47. 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.
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48. KEY TERM
global warming
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49. Consumers in Society Sharing limited resources
Protecting public safety
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50. 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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51. Checkpoint 1.6
How can your consumer choices affect the people around you?
What can you do to be a more environmentally responsible consumer?
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52. Checkpoint 1.6 answers
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
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53. Checkpoint 1.6 answers
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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