Production, Distribution, and Consumption

KCCT Coach Book

Chapter 11

Producers and Consumers

a PRODUCER is a person or organization that creates goods or provides services

examples: farmers produce crops, plumbers produce plumbing services, bankers produce financial services

can you think of other examples of producers?

Producers and Consumers

Producers that create physical goods sell their products to DISTRIBUTERS such as retail and wholesale outlets

these outlets then sell their products to CONSUMERS

a CONSUMER is a person who buys GOODS and SERVICES

Producers and Consumers

when a CONSUMER is planning on buying something, two factors go into her decision: PRICE and QUALITY

Generally, consumers will compare PRICES and choose the least expensive item (if the quality is the same)

Producers and Consumers

QUALITY is also important—how well the item is made and how long it will last

The consumer will consider the PRICE and QUALITY of services too, when making an economic decision

before hiring someone for a SERVICE, the CONSUMER will often ask for an ESTIMATE (a projection of the cost)

what could you get an ESTIMATE for?

Joe bought a LynkCo brand watch from Bob’s Watch Emporium and gave it to his girlfriend, Tina. Who is the producer?

25%

25%

25%

25% 1. Joe

2. Tina

3. LynkCo

4. Barry’s Watch Emporium

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

If you were planning to purchase a new pre-packaged computer system, you would want to do which of the following?

25%

25%

25%

25% 1. ask the consumer for an estimate

2. review the service warranty

3. look for the most expensive price

4. contact the salesperson about the computer she built

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

Sources of Goods and Services

when you think about producers you probably think of MANUFACTURERS

however, the government is also a PRODUCER

the government offers goods and services such as police forces, fire fighting departments, education, and food surpluses

Sources of Goods and Services

in the case of the government as a producer, the consumer is the general public

the goods and services are “bought” with TAXES

TAXES are monies paid to the government to fund its operation

Sources of Goods and Services

private businesses also offer goods and services similar to those provided by the government

Police vs. security guardspublic schools vs. privatefood surpluses vs. grocery stores

Sources of Goods and Services

the main difference between government and private services is the reason for providing the goods or services and the people that benefit from the goods or services

the government’s purpose is to meet the people’s needs

the private business’s purpose is to make a profit

Sources of Goods and Services

the people that benefit from the government’s public services are members of the public

How do you benefit from public services?

Which of the following is provided by the government?

25%

25%

25%

25% 1. plumbing services

2. voluntary surgery

3. television sets

4. sewage treatment

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

Private businesses are paid for their goods and services primarily by:

25%

25%

25%

25% 1. the public

2. taxes

3. private individuals

4. government

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

Specialized producers

Many producers create a wide variety of products designed to meet the needs of many people

some producers SPECIALIZE. this means they create only specific goods or services designed to meet specific needs

one producer may make bath soap, laundry detergent, car cleaner, sponges, brooms, and paper towels, while a producer that SPECIALIZES would only make one product

Specialized Producers

producers that specialize do so for several reasons…

their product can be the best it can be, because all the focus is on it

the producer can develop a good reputation by producing a great product

some needs are so specific, that only a company that specializes can meet that need

Which of the following businesses is the most specialized?

25%

25%

25%

25% 1. Andy’s Bicycles

2. Bob’s Tubs and Stuff

3. Cindy’s Department Store

4. Dee’s Dresses, Doughnuts, and Duck ponds

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

By specializing, producers do all BUT which?

25%

25%

25%

25% 1. provide a higher quality product

2. offer a vast selection for consumers

3. work to build a solid reputation

4. meet a very specific need

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

Which producer provides legal services?

25%

25%

25%

25% 1. plumber

2. baker

3. attorney

4. manufacturer

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

A company manufactures clocks by the thousand. The clocks are sold to individuals by:

25%

25%

25%

25% 1. consumers

2. distributors

3. manufacturers

4. the government

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

The two primary concerns for consumers when they make a choice are:

25%

25%

25%

25% 1. price and quality

2. price and color

3. color and quality

4. price is the only concern

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

The consumers of goods and services provided by the government are:

25%

25%

25%

25% 1. private individuals

2. the public

3. government

4. distributors

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

Which of the following is a service provided by a private business?

25%

25%

25%

25% 1. fire departments

2. security guard service

3. public schooling

4. police departments

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30

Which business is most specialized?

25%

25%

25%

25% 1. Sal’s Sporting Goods store

2. Lou’s Shoes

3. Tula’s Department Store

4. Malcolm’s Anything for a Buck

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30