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Chapter 3
MARKETING BEGINS MARKETING BEGINS WITH ECONOMICSWITH ECONOMICS
3-1 Scarcity and Private Enterprise
3-2 Observing the Law of Supply and Demand
3-3 Types of Economic Competition
3-4 Enhancing Economic Utility
CHAPTER
3
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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
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SCARCITY AND PRIVATE ENTERPRISE
GOALSGOALSIdentify the basic economic problem.Describe how America’s private
enterprise economy works.
3-1
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The Importance of Economic Understanding
The basic economic problemWho makes the decisions?
Controlled economy—governmentFree economy—individualsMixed economy—government and private
enterprise
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America’s PrivateEnterprise Economy
CharacteristicsConsumersProducersGovernment
Economic forces
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OBSERVING THE LAW OF SUPPLY AND DEMAND
GOALSGOALSExplain microeconomics and the
concept of consumer demand.Identify factors that affect supply and its
relationship to demand.
3-2
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Macroeconomics
Macroeconomics studies the economic behavior and relationships of an entire society.
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Microeconomics
Microeconomics is the study of relationships between individual customers and producers.
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Microeconomics andConsumer Demand
Factors affecting demandAnalyzing demand curves
Demand curveLaw of demandEconomic market
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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
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Supplying the Product
Handling the competitionAnalyzing supply curve
Supply curveLaw of supply
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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
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Intersecting Supply and Demand
SupplyDemandMarket price
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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
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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
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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
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TYPES OF ECONOMIC COMPETITION
GOALSGOALSDefine pure competition and monopoly.Explain the characteristics of
oligopolies and monopolistic competition.
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All-Out Competition or No Competition At All
Pure competitionMonopoly
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Price
Quantity
Demand Curve for One Companyin Pure Competition
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Price
Quantity
Demand Curve for a Monopoly
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Between the Extremes
OligopoliesMonopolistic competitionUnderstanding the competition
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Demand Curve for One Company in an Oligopoly
Price
Quantity
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Demand Curve for the Industry in an Oligopoly
Price
Quantity
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Price
Quantity
Demand Curve for Monopolistic Competition with Few Product Differences
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Demand Curve for Monopolistic Competition with Greater Product Differences
Price
Quantity
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ENHANCINGECONOMIC UTILITY
GOALSGOALSDefine four types of economic utility.Explain how marketers use utility to
increase customer satisfaction.
3-4
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Utility Means Satisfaction
Economic utilityForm utilityTime utilityPlace utilityPossession utility