Role of Consumers in a Free
Enterprise System
Chapter 28
Questions for You
1.
2.
3.
4.
5.
6.
Where are your favorite places to shop (for
clothes, shoes, accessories, electronics)? Why?
Where is your least favorite place to shop? Why?
Have you bought anything online?
Have you bought anything from an infomercial?
Do you tend to buy on impulse or do you plan out
your purchases?
Do you search for deals? If so, where?
A Couple More Questions
7.
8.
Have you ever purchased something (a
product or a service) and afterward felt like
you had been ‘ripped off’ or taken
advantage of?
Have you ever had a problem with
something you purchased? Were you
allowed to return it and refunded your
money? Or not?
Chapter 28 - Objectives
Lesson 28.1


Describe the marketplace that we live in
List and describe the 3 basic components of
a free enterprise system (and the importance
of each)
Characteristics of a Marketplace
(Market vs. Command Economies)

Market Economy
–
–
aka Capitalism
Free enterprise


Producers and
Consumers are free to
engage in business
transactions
Driven by the laws of
Supply and Demand

Command Economy
–
–
aka Communism
Planned or managed


Government decides
what goods and
services are produced
Very limited choices for
consumers
Basic Economic Problem
(in any Economy)

What is it?
–

What causes it?
–
Consumers have unlimited wants
Producers have limited resources
–
Consumers also have limited resources ($)
–

Scarcity
Who plays the bigger role in determining
what gets produced?
The Marketplace in the U.S.


We live in a Free Enterprise System, with
limited Government Control
What role does the Government have?
–
–
–

Collect taxes from individuals & businesses
Provide certain things (roads, schools, security,
etc.)
Regulate business and business activities (laws)
How are prices determined?
–
Based on the laws of supply and demand
Supply and Demand

Supply – quantity that Producers (suppliers) are
willing and able to provide

Demand – willingness of Consumers (buyers) to
buy at certain prices

Equilibrium price – the price at which the quantity
supplied equals the quantity demanded
–
What happens to prices if supply exceeds demand?
–
What happens to prices if demand exceeds supply?
Fluctuating Gasoline Prices






Sept 2008 – prices were approx. $4.19
Over the winter (2008-2009), they hit a low of approx.
$1.50
In April 2012, they were $4.49
In May 2014, they were $3.59
Feb 8, 2016, they were $1.37
How do the changing gas prices affect consumers?
Parts of the Free Enterprise System

Competition
–

Purchasing Power
–
–
–

Rivalry among sellers to win customers
Ability to buy (having $)
During periods of Inflation, buying power drops
Government assistance (transfer payments – welfare,
social security, veterans benefits, etc.)
Informed Consumers
–
Knowing their rights and responsibilities
Chapter 28 – Section 1 Review
1.
2.
3.
T or F. Consumers have more choices in a
command economy than in a market
economy.
T or F. Prices in our country are determined
and set by the government.
The basic economic problem in any society
is known as __________.
Chapter 28 – Section 1 Review
4.
5.
6.
7.
8.
Who controls supply?
Who creates demand?
What relationship between supply and
demand will likely cause prices to increase?
What are the 3 necessary parts of a free
enterprise system?
What are transfer payments?
Chapter 28 – Objectives (Section 28.2)



Identify and describe deceptive marketing
practices
Explain how to protect yourself from them
Discuss how to be a responsible consumer
–
–
–
Shop wisely
Stay informed
Seek redress
Watch Out for These Tricks!
Identify Deceptive Practices
(Things to watch for)








Get something for nothing
A free gift for early reply
You have been specially selected …
You can make big $$ working from home (no experience
required)
A no-obligation demonstration is offered, often with a
free gift
You must decide immediately or lose the opportunity
To receive a product or service, you must first send
money or give credit card info
To receive a prize, you must supply personal information
Fraudulent and Deceptive
Marketing Practices





Bait & Switch
Fake Sales
Low Balling
Pyramid Schemes
Pigeon Drop





Fraudulent
Representation
Health & Medical
Products Fraud
Infomercials
Internet Fraud
Telemarketing
Fraud
Shop Smart, Including Online






Be aware of prices
Shop at several stores
Understand sale terminology
Avoid impulse buying
Plan your purchases
Compute unit prices
(3 for $.90 or 6 for $1.50)
(24 ounces for $2.59 or
15 ounces for $1.89)









Read labels
Check containers
Read contracts
Keep receipts/warranties
Compute total cost
Ask for references
Be loyal
Check up on businesses
Wait a day (24 hours) for
major purchases
Seek Redress
What is redress?
–

A remedy to a problem
If you have a problem with something you purchased,
how do you resolve the problem? The steps …
1.
2.
3.
4.
5.
6.
Take it back and explain the problem
Ask to talk to a manager (if necessary)
Put your complaint in writing (send to store owner or
headquarters) – explain previous events
Write the manufacturer or distributor – explain previous
events
File a complaint with the appropriate consumer services
agency
Seek legal recourse – hire an attorney (last resort)