CONTENT/TEACHING OUTLINE COMPETENCY: OBJECTIVE: 3.00 3.

01 Explain economic foundations relevant to the sports and entertainment marketing industry. Explain the concept of economics.

A. Explain economics and identify basic economic resources. 1. Economics is the study of how to meet unlimited wants and needs of a society with its limited resources. 2. Resources include all things used in producing goods and services. 3. Economic resources are land, labor, and capital resources that can be used to produce the goods and services that people consume. a. Land, also known as a natural resource, includes everything contained in the earth and found in the sea. b. Labor, also known as human resources, includes all workers in the economy, including full- and part-time workers, managers, public employees, and professional people. c. Capital includes the money needed to start and operate a business, as well as goods used in the production of other goods. Capital resources can be limited because they deteriorate through use or are of poor quality. For example, machinery such as an oven at a pizza restaurant. 4. Scarcity is a condition in which more goods and services are desired than are available. Scarcity forces people, businesses and nations to make choices. Unlimited wants with limited resources results in scarcity. 5. Economic goods are tangible items. For example, a television or baseball bat. 6. Economic services are intangible. For example, going to a play or attending a baseball game. 7. Entrepreneurship incorporates the skills of people who are willing to take the risk of starting their own business. Entrepreneurs organize economic resources in order to create goods and/or services needed and desired in an economy. B. Describe the five economic utilities. 1. Utility refers to the added value or usefulness of a product. 2. Five types of economic utility. a. Form utility is the value added by changing raw materials or putting parts together to make them more useful. For example, wood for a baseball bat. b. Place utility is the value added by having a product where customers can buy it. For example, selling movie tickets at the movie theatre. c. Time utility is the value added by having a product at a certain time of year or a convenient time of day. For example, selling lemonade at the Verizon Amphitheatre for a concert in the summer. d. Possession utility is the value added by exchanging a product for some monetary value. For example, a consumer pays $25 for a t-shirt at a concert. e. Information utility is the value added by communicating with the consumer. For example, visiting the Meymandi Concert Hall website (www.meymandi.org) to find out information about upcoming events.
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CONTENT/TEACHING OUTLINE COMPETENCY: OBJECTIVE: 3.00 3.01 Explain economic foundations relevant to the sports and entertainment marketing industry. Explain the concept of economics.

C. Discuss the three basic economic questions and the role of the government of each system. 1. The three basic economic questions are: a. What goods and services should be produced? b. How should the goods and services be produced? c. For whom should the goods and services be produced? 2. In a market economy, there is little government involvement in answering the three basic economic questions; the market answers them. Consumers decide what should be produced. Businesses decide how products will be produced. The people who have the money to purchase products determine who will receive them. 3. In a command economy, the government answers the three basic economic questions. The government officials or leaders decide what should be produced. The government runs the businesses and employs the workers. The government also decides who will receive products. 4. In a traditional economy, the system is based on the ways things have always been done. For example, the Amish community and Indian Reservations. 5. Mixed economies are not pure market systems, nor are they completely controlled by the government. They are a mix, or blend, of the two. All economies presently are mixed economies. a. Capitalism. The people elect the government officials who represent their constituents interests. For example, the United States and Japan. b. Socialism. Although most socialist countries are democratic, the socialist economy has increased government involvement. The government tries to reduce the differences between the rich and the poor. The socialist model is based on the welfare of the people. For example, France, Germany, and Great Britain. c. Communism. Communist countries have a government that is run by one political party and that party controls everything. People are assigned jobs. Students are told what type of schooling they will receive. For example, Cuba and North Korea. D. Explain supply and demand. 1. Supply is the amount of goods producers are willing and able to produce and sell at a given price during a certain period of time. Producers prefer to supply when the price is high; this is known as a sellers market. 2. Demand is a consumers willingness and ability to buy products at a given price during a certain period of time. Consumers prefer to buy when the price is low; this is known as a buyers market. 3. The Law of Supply and Demand is an economic principle that states the supply of a good or service will increase when demand is great and decrease when demand is low.
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CONTENT/TEACHING OUTLINE COMPETENCY: OBJECTIVE: 3.00 3.01 Explain economic foundations relevant to the sports and entertainment marketing industry. Explain the concept of economics.

a. Elasticity is the degree to which demand for a product is affected by its price. For example, when the price of a Tampa Bay Buccaneers authentic jersey rises by 10% the quantity demanded falls by 26%. Demand is price sensitive. b. Elastic demand refers to how changes in the price of a product affect demand for that product. For example, when the price of a CD is reduced, demand may increase. c. Inelastic demand refers to a condition in the market where changes in the price of a product have very little affect on the demand for that product. For example, some people might be willing to pay any price for Super Bowl tickets. 4. Factors that affect the elasticity of demand a. Availability of substitutes. If a substitute is easily obtainable, demand becomes more elastic. For example, Walt Disney World, SeaWorld Orlando, Universal Studios Orlando, and Busch Gardens Tampa. b. Brand loyalty. Many customers will only purchase a certain brand of products. In general, they will accept no substitutes. In this situation, demand becomes inelastic. For example, fans of the Terry Labonte #5 Kelloggs Chevrolet Monte Carlo may be more likely to purchase Kelloggs brand breakfast cereals over any other brand. c. Price relative to income. When an increase in the price of a good or service does not have a major impact on a customers budget, the demand is usually inelastic. When an increase in the price of a good or service has a major impact on a customers budget, the customer most likely will no longer buy a product. In this case, the demand is elastic. For example, luxury suites versus general admission. d. Luxury vs. necessity (want vs. need). When a product is a necessity, demand is usually inelastic. When a product is a luxury, demand is most likely to be elastic. For example, season tickets to N.C. State football versus gas for your vehicle. e. Urgency of purchase. If a purchase must be made immediately, demand tends to be inelastic. For example, front row tickets to Jimmy Buffetts last concert. E. Identify the phases of a business cycle and the impact of each on the sports and entertainment industry. 1. The business cycle is the movement of an economy through four recurring phases prosperity, recession, depression, and recovery. 2. Explain the phases of a business cycle. a. Prosperity (Peak) i. Highest period of economic growth ii. Low unemployment
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CONTENT/TEACHING OUTLINE COMPETENCY: OBJECTIVE: 3.00 3.01 Explain economic foundations relevant to the sports and entertainment marketing industry. Explain the concept of economics.

iii. High output of goods and services iv. High consumer spending v. Increased attendance and purchasing of related merchandise b. Recession i. Economic slowdown ii. Rise in unemployment iii. Production slows down iv. Decrease in consumer spending v. Decrease in attendance and purchasing of related merchandise c. Depression (Trough) i. Prolonged recession ii. Extremely low consumer spending iii. High unemployment iv. Drastic decrease in production of products v. Poverty can result vi. Lowest point of attendance and few related items are purchased d. Recovery i. Renewed economic growth and an increase in output of goods and services ii. Reduced unemployment iii. Increased consumer spending iv. Moderate business expansion v. Gradual increase in leisure time activities and purchase of related merchandise

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CONTENT/TEACHING OUTLINE COMPETENCY: OBJECTIVE: 3.00 3.01 Explain economic foundations relevant to the sports and entertainment marketing industry. Explain the concept of economics.

Resources Printed References: Marketing Essentials, 3rd ed., pp. 52-75. Marketing, pp. 43-46, 58-67, 75, 380-383, 551. Suggested Activities: Utility activity Divide students into groups and provide each group with a selection of miscellaneous materials. Items such as pipe cleaners, tongue depressors, yarn, pieces of cardboard, buttons, etc. are useful. Each group is to create a product from their materials. Then each group is to create a poster to present detailing how they can apply the five types of utility to their product. Economic model activity Using countries such as Cuba, Canada, North Korea, France, Vietnam, and societies such as the Amish, etc. which have a different economic system than ours, have students research how the three economic questions are answered. Supply & Demand activity As a class, list professional and college teams with a variety of standings on the board. (For example, list teams with losing seasons, winning seasons and in-between.) Assign each pair of students a team to research on the Internet. They are to uncover the current demand and prices for tickets and merchandise of their particular team. Teams can then share their information with the class. The objective is for students to understand the correlation between the team standing and the concept of supply and demand for tickets and merchandise.

Teacher Notes

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CONTENT/TEACHING OUTLINE COMPETENCY: OBJECTIVE: 3.00 3.01 Explain economic foundations relevant to the sports and entertainment marketing industry. Explain the concept of economics.

Resources, cont.. Suggested Activities: Elasticity collage Have students create a collage (can be done on PowerPoint using clip art from the Internet) with pictures illustrating goods with elastic demand and inelastic demand. Students can provide the appropriate factor affecting the elasticity of demand as a label under each picture. Business cycle timeline Have students research the U.S. economy over the last 100 years and create a timeline illustrating the phases. In addition, students can provide the factors and occurrences affecting the movement of the economy. This will help students understand how our economy is very fluid. There is a 3.00 project at the end of this competency. Websites: www.cia.gov The World Factbook

Teacher Notes

Other Resources: 3.01 PowerPoint Presentation

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