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