Economics of Marketing (part I)

Question 1

Define economics

Answer 1

The study of the choices and decisions that affect making, distributing, and using goods and services

Question 2

What is GDP

Answer 2

Gross domestic product
Its one measure of economic growth

Question 3

Describe supply

Answer 3

All the products available for sale

Question 4

Describe demand

Answer 4

The customers desire/ability to buy products

Question 5

Explain the supply and demand theory

Answer 5

When there is a limited supply and high demand for products, businesses can charge higher prices

When a great number of products are available with low demand for them, prices need to be lower to encourage people to buy the products

Question 6

What kind of competition does “demand elasticity and available substitutes” follow?

Answer 6

Price competition

Question 7

Explain demand elasticity and available substitutes

Answer 7

When there are many substitutes for a product (tea for coffee, apple for orange juice) demand for the product is elastic.

Change in price affects demand for the product
The theory is that when you lower your price, demand will increase, and vice versa

Question 8

List the 3 factors of non-price competition. Do the supply and demand theory principles apply to non-price competition?

Answer 8

1. Quality
2. Service
3. Image
   In these cases, the supply and demand principles do not apply

Question 9

List 2 ways that sports or entertainment can experience risk

Answer 9

1. There is always a financial risk or possible loss involved with sports and entertainment events
2. A movie that does not attract audiences may fail to make profit.
   Sporting teams may not be successful in their current day