Our Needs and Wants

Needs

- Foods, water, and shelter

Wants

- Luxurious Watches, Smartphones, cars.

 Consumers distinguishing between needs and wants is a rather hard choice. Social pressures
can make us think a want is a need such as a business can make us think that so, they can
make a profit.

Ways how business attract costumers to buy their product

- Flashy advertisements
- TV, Radio
- Celebrities to Promote their products in movies and magazines

Social outcast

- someone who is not accepted or is ignored by the people around them hence they don’t
have something the rest do

Rational Decision

- Rational decision-making is making decisions in a way that is both logical and informed.

Irrational Decision

- Making a choice which is not logical

Relative Scarcity

- Our want are unlimited, but the resources required to fulfil them are limited.
- This can cause damage to the natural environment

Examples of needs

- Water
- Food
- Shelter
 - Basic Clothing

Examples of Wants

- Education
- Furniture
- Computers
- Cars
- Watches

Goods

- Items that can be touched; tangible

- Books

Services

- Items that cannot be touched

- Hairdresser

Producer

- Someone who producers or creates goods and services

- Make a form of business that operate to make a profit

Types of Producers

 Primary Producers
- The oldest and most important type of producer in any economy
- Produce food, vegetables, fruits
 Secondary Producers
- Manufacture goods in factories
- Produce, clothing, phones, cars
 Tertiary Producers
- Services that are intangible
- Banks, schools

Profit

- the amount of money a business earns after taking away the expenses that it has to pay

Consumer
 - Someone who buys or uses these goods and services
- Is

Types of Consumers

 Loyal Consumers
- People who continue to purchase goods and services from the same business for a long
period of time
- Business can encourage more customers to be loyal by offering bonuses (Fly buys) Giving
high-quality products and treating with care.
 Discount Consumers
- Only by product for the best value possible.
- They often find sale item that attract them, giving profit for business
 Impulsive Consumers
- People who buy things according to their gut feeling.
- Do not make many calculations
- Attracted to advertisements
 Needs-Based Consumers
- Only purchase products that they really require
- Don’t buy anything that they think is necessary
- So, business should provide wide range of products

Pricing Strategy

 Cost Plus Margin

- Selling price is equal to the cost to produce the item plus profit
 Economy Pricing
 It is when the business provides sales for the consumers for more or 2 dollars of item

- Aim to make a small profit from each sale, but achieve a high number of sales due to the low
price they set
 Penetration Pricing
- Enter market with a low price to encourage consumers to try the new product, once the
product builds up enough regular customers, the business may raise the price so that it is
more profitable
 Premium Pricing
- Tries to establish itself as a high-quality brand by setting a price higher than its competitors.
This will convince people that it is better than the other product and is something different
 Psychological Pricing
- By placing $9.95 rather than $10.00 hence consumers are more attracted to this than that

Factors of Production

 Land
- Natural resources such as water and land
  Labour
- The employees and their skills
 Capital
- Money
- Equipment
- Buildings
 Enterprise
- The minds behind the business
- Ability to put land, labour, and capital together to create goods and services

 Some produces can be extremely expensive such as a car, so you can’t by a car for 20 dollars

Opportunity cost

- When missing out the second chance or opportunity when choosing something else.
- E.g. you make $10 for pants and $5 profit for shirts and choose on doing a business with
pants, you are missing out on the shirts.

Why to businesses change their prices?

1. They might change their price if the original price is not successful
2. If the cost of making a product increases, they will have to increase their selling price as well.
3. Can change their prices to compete with their competitors

How businesses respond to consumer demand

- Social media had allowed consumers to learn more about how their consumption affects
their health as well as the world around them
- Successful businesses will have to change their products on behalf of the consumers
interests. If a business fails in doing that, then they will have a loss

Health-Conscious consumers

- Many consumers have been aware of the side-effects of fast-food.

- Many people have been choosing a healthier lifestyle
- This has not been an advantage for fast food companies.
- Businesses must respond fast to the choices of consumers

Environmentally friendly consumers

- In the recent years, consumers have been aware about the devastating effects that human
consumption is having on the environment and it’s an impact to our lives
- Businesses must respond fast to the choices of consumers
Socially responsible consumer

- Many consumers had been aware that hence businesses need to make a profit, they are
seeking cheaper products for poorer nations, by abusing and mentally affecting them.
- They are asking the businesses to not harm the poor employees and treat them fairly.

Global business and consumer demand

- Due to the fast-growing technology, we are importing many things from other countries.

Demand

- Is the quality of a good that consumers are willing and able to purchase

Supplies

In economics, supply is the amount of a resource that firms, producers, labourers, are willing and
able to provide to the marketplace or to an individual. Supply can be in produced goods, labour
time, raw materials, or any other scarce or valuable object.