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Chapter 18 Goods and Services Sections 1-3 Production • Gross Domestic Product (GDP) Amount of all the goods and services produced inside a country. • USA GDP is 13.543 Trillion dollars. • Other measures of economic success is employment percentage, or percentage of the population employed Mass Production • Mass Production – production by machine of large numbers of identical goods. • Allows the production of large number of goods for sale and export. • Eli Whitney – Creates the Interchangeable Part – parts that work on any product. Example guns, cars, etc… Foundations of Mass Production • 1. Machine Tools – machines that produce parts that are exactly the same. • 2. Standard Parts – any part will fit another part. This makes replacement easier. • 3. Division of Labor – divides production into smaller non-specialized jobs. This leads to faster production • 4. Power Source – what makes the machines run. 1700’s – water 1800’s – Steam 1900’s electricity Assembly Line • The automobile creates the assembly line. • Each person assembles a part until the product is whole. • Welcome to Neillco pen company • 1. be fast • 2. be perfect • 3. no breaks Distribution • After production of goods the next step is distribution – the spread of goods to consumers for sale. • Railroads – as railroads were built products began to be sent using this new technology. • Speed – the faster things are produced the faster they sell this increases demand. Distribution cont… • Air – planes carry people, products, and communications very fast. • Highways – make up over 80 percent of transportation. Most common way to travel. What could cause this to change? Mass Marketing • Selling goods in large quantities. • Self-Service – rather than people selling things to you, you get your own things. Grocery stores have self check-out. This cuts down on labor costs. • Standard Packaging – goods now come already packaged ready for sale. No handling by seller keeps costs down. Mass Marketing cont… • One-Price System – prices are stamped onto the product using a bar code. This takes away confusion and streamlines the process. • Mass marketing keeps costs down. • This makes products cheaper for everyone. Shopping • Malls – large complexes featuring many kinds of stores. • Easier shopping increases the chance that people will spend more. • Specialty Stores – chains that specialize in one product or brand. Aeropostale, American Eagle, and Abercrombie and Fitch. Wholesale v Retail • Wholesale – buying goods from large stores in large quantities. • Sell to the stores who sell to the public. • Retail – stores that sell goods to the public at a higher price. • Advertising – informs people about products and tries to get them to buy certain products • Brand Name v. Generic. The Consumer • A person who buys goods or uses services. • Price v. Quality – Brand Names cost more and have higher quality. Generic brands cost less and have lower quality. • Is this true? Reading Labels • Fair Packaging and Labeling Act – businesses have to supply accurate label information. • Nutrition Labeling and Education Act – Indentify contents. • Serving size, Fat, Cholesterol, Sodium, and Fiber Buy Now Pay Later • Charge Accounts – allows people to purchase goods with a promise to pay. • Installment Plans – with a down payment you can take a good and pay equal amounts at a time until the balance is paid off.