MARKETING AND ECONOMICS 1 2 3 4 Scarcity

MARKETING AND ECONOMICS 1 2 3 4 Scarcity and Private Enterprise Observing the Law of Supply and Demand Types of Economic Competition Enhancing Economic Utility Chapter 3 1

©MORGAN STANLEY Focus Questions: l Does the use of a Chinese language headline increase or decrease your interest in the advertisement? l What is the key message Morgan Stanley is trying to communicate? l Offer examples of how the growth of the economies in other countries around the world affects U. S. businesses and consumers. Chapter 3 2

SCARCITY AND PRIVATE ENTERPRISE GOALS o Identify the basic economic problem. o Describe how America’s private enterprise economy works. Chapter 3 3

The Importance of Economic Understanding o o The basic economic problem Who makes the decisions? n n n Controlled economy—government Free economy—individuals Mixed economy—government and private enterprise Chapter 3 4

America’s Private Enterprise Economy o Characteristics n n n o Consumers Producers Government Economic forces Chapter 3 5

OBSERVING THE LAW OF SUPPLY AND DEMAND GOALS o Explain microeconomics and the concept of consumer demand. o Identify factors that affect supply and its relationship to demand. Chapter 3 6

Macroeconomics o Macroeconomics studies the economic behavior and relationships of an entire society. Chapter 3 7

Microeconomics o Microeconomics is the study of relationships between individual customers and producers. Chapter 3 8

Microeconomics and Consumer Demand o o Factors affecting demand Analyzing demand curves n n n Demand curve Law of demand Economic market Chapter 3 9

Demand Curve for Movies Price $10. 50 9. 00 7. 50 6. 00 4. 50 3. 00 1. 50 1, 000 2, 000 3, 000 4, 000 5, 000 6, 000 7, 000 Quantity Chapter 3 10

Supplying the Product o o Handling the competition Analyzing supply curve n n Supply curve Law of supply Chapter 3 11

Supply Curve for Cell Phones Price $105 90 75 60 45 30 15 10, 00020, 00030, 00040, 00050, 00060, 00070, 00080, 000 Quantity Chapter 3 12

Intersecting Supply and Demand o o o Supply Demand Market price Chapter 3 13

Demand Curve for Notebook Computers Price $2, 100 1, 800 1, 500 1, 200 900 600 300 100 200 300 Quantity (in 000 s) Chapter 3 400 500 600 700 800 14

Supply Curve for Notebook Computers Price $2, 100 1, 800 1, 500 1, 200 900 600 300 100 200 300 Quantity (in 000 s) Chapter 3 400 500 600 700 800 15

Market Price for Notebook Computers Price $2, 100 Demand Supply 1, 800 1, 500 Market Price 1, 200 900 600 300 100 200 300 Quantity (in 000 s) Chapter 3 400 500 600 700 800 16

TYPES OF ECONOMIC COMPETITION GOALS o Define pure competition and monopoly. o Explain the characteristics of oligopolies and monopolistic competition. Chapter 3 17

All-Out Competition or No Competition At All o o Pure competition Monopoly Chapter 3 18

Demand Curve for One Company in Pure Competition Price Quantity Chapter 3 19

Demand Curve for a Monopoly Price Quantity Chapter 3 20

Between the Extremes o o o Oligopolies Monopolistic competition Understanding the competition Chapter 3 21

Demand Curve for One Company in an Oligopoly Price Quantity Chapter 3 22

Demand Curve for the Industry in an Oligopoly Price Quantity Chapter 3 23

Demand Curve for Monopolistic Competition with Few Product Differences Price Quantity Chapter 3 24

Demand Curve for Monopolistic Competition with Greater Product Differences Price Quantity Chapter 3 25

ENHANCING ECONOMIC UTILITY GOALS o Define four types of economic utility. o Explain how marketers use utility to increase customer satisfaction. Chapter 3 26

Utility Means Satisfaction Economic utility o Form utility o Time utility o Place utility o Possession utility Chapter 3 27