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Chapter 3 1
MARKETING AND ECONOMICS
1 Scarcity and Private Enterprise2 Observing the Law of Supply and
Demand3 Types of Economic Competition4 Enhancing Economic Utility
Chapter 3 2
Focus Questions:Does the use of a
Chinese language headline increase or decrease your interest in the advertisement?
What is the key message Morgan Stanley is trying to communicate?
Offer examples of how the growth of the economies in other countries around the world affects U.S. businesses and consumers.©
MO
RG
AN
ST
AN
LEY
Chapter 3 3
SCARCITY AND PRIVATE ENTERPRISE
GOALSGOALS Identify the basic economic problem. Describe how America’s private
enterprise economy works.
Chapter 3 4
The Importance of Economic Understanding
The basic economic problem Who makes the decisions?
Controlled economy—government Free economy—individuals Mixed economy—government and
private enterprise
Chapter 3 5
America’s PrivateEnterprise Economy
Characteristics Consumers Producers Government
Economic forces
Chapter 3 6
OBSERVING THE LAW OF SUPPLY AND DEMAND
GOALSGOALS Explain microeconomics and the
concept of consumer demand. Identify factors that affect supply and
its relationship to demand.
Chapter 3 7
Macroeconomics
Macroeconomics studies the economic behavior and relationships of an entire society.
Chapter 3 8
Microeconomics
Microeconomics is the study of relationships between individual customers and producers.
Chapter 3 9
Microeconomics andConsumer Demand
Factors affecting demand Analyzing demand curves
Demand curve Law of demand Economic market
Chapter 3 10
Price$10.50
9.00
7.50
6.00
4.50
3.00
1.50
1,000Quantity
2,000 3,000 4,000 5,000 6,000 7,000
Demand Curve for Movies
Chapter 3 11
Supplying the Product
Handling the competition Analyzing supply curve
Supply curve Law of supply
Chapter 3 12
Price$105
90
75
60
45
30
15
10,000Quantity
20,000 30,000 40,000 50,000 60,000 70,000 80,000
Supply Curve for Cell Phones
Chapter 3 13
Intersecting Supply and Demand
Supply Demand Market price
Chapter 3 14
Demand Curve for Notebook Computers
Price
$2,100
1,800
1,500
1,200
900
600
300
100Quantity (in 000s)
200 300 400 500 600 700 800
Chapter 3 15
Supply Curve for Notebook Computers
Price
$2,100
1,800
1,500
1,200
900
600
300
100Quantity (in 000s)
200 300 400 500 600 700 800
Chapter 3 16
Price
$2,100
1,800
1,500
1,200
900
600
300
100Quantity (in 000s)
200 300 400 500 600 700 800
Market Price for Notebook Computers
DemandDemand SupplySupply
Market PriceMarket Price
Chapter 3 17
TYPES OF ECONOMIC COMPETITION
GOALSGOALS Define pure competition and
monopoly. Explain the characteristics of
oligopolies and monopolistic competition.
Chapter 3 18
All-Out Competition or No Competition At All
Pure competition Monopoly
Chapter 3 19
Price
Quantity
Demand Curve for One Companyin Pure Competition
Chapter 3 20
Price
Quantity
Demand Curve for a Monopoly
Chapter 3 21
Between the Extremes
Oligopolies Monopolistic competition Understanding the competition
Chapter 3 22
Demand Curve for One Company in an Oligopoly
Price
Quantity
Chapter 3 23
Demand Curve for the Industry in an Oligopoly
Price
Quantity
Chapter 3 24
Price
Quantity
Demand Curve for Monopolistic Competition with Few Product Differences
Chapter 3 25
Demand Curve for Monopolistic Competition with Greater Product Differences
Price
Quantity
Chapter 3 26
ENHANCINGECONOMIC UTILITY
GOALSGOALS Define four types of economic utility. Explain how marketers use utility to
increase customer satisfaction.
Chapter 3 27
Utility Means Satisfaction
Economic utility Form utility Time utility Place utility Possession utility