Economics Unit 1 Lesson 2 Part 2

NFLUENCING CONSUMER PREFERENCES

There are two main factors that persuade people to prefer one product over others: peer pressure and advertising. Peer pressure is when your peers (think friends, classmates) influence you to behave in a certain way. The second type of pressure that may influence which products you prefer comes from the world of advertising. Advertising is the art of persuading people to buy a product or service.

NEEDS, WANTS, PREFERENCES

You already learned that a need is something essential for living. Food, water, shelter, and clothing are needs. They are actually examples of physiological needs—that is, needs that satisfy your physical state. You also have wants, which are things that you would like to have, but do not need. Economic wants are desires, or things that you long for. They can be satisfied by consuming a good (think an extra pair of jeans) or a service (such as going to a concert). Some items fall into both categories. For example, food is a both a need and a want. You need food to live, but dining out every day in expensive restaurants is a want. Your needs are based on what is required for survival. Obviously, you need water to live—in fact, you can't survive much more than a week without it. But, what about your wants? How do you decide what you want? How do you figure out if you want a concert ticket or a pair of jeans?

Preferences

You decide your wants based on your preferences. Did you notice that the first six letters of the word "preference" make the word "prefer?" Prefer means liking one thing better than another. Suppose you want to buy a new T-shirt, and the shirt comes in two colors—red and yellow. You look at both T-shirts, try them both on, and even note that they cost the same amount. In the end, you choose the yellow shirt because it looks better on you. In other words, you prefer the yellow shirt. You like it better than the red one. Preferences are the person, object, or action that you pick over other choices. The yellow T-shirt is your preference. It is the object that you picked over other choices, in this case the red shirt. There are different factors that determine people's preferences, or tastes.

Preferences

based on the individual

Select all the items that describe advertising.

can be in print or internet does not have anything to do with goods or services

Which factors might determine your preference for a new shirt?

color and how it looks on you

You don't want to buy one of the new music downloads, but your friends convince you to buy it anyway. This is an example of

peer pressure

You have a choice between buying a cell phone or a camera. You choose the cell phone. The cell phone represents your

preference

preferences

the people, objects, or actions that are chosen over other options

physiological needs

things essential for a person's body

prefer

to like one thing better than another

celebrity endorsement

use of famous people to promote a product

advertising

use of media to persuade consumers to buy a product or service

desire

want

peer pressure

when friends influence people to behave in a certain way