Background Notes
Economics is basically the study of how society decides what and how it produces and as it is believed that our wants are infinite are resources are actually limited. All consumers, therefore, have to make a series of choice about what they want to buy and own.

There are many different factors that affect the economy as a whole such as:

• unemployment levels
  
• inflation rates
  
• interest rates
  
• balance of payments
  
• the rate of economic growth

Each Government will have a series of economic policies and they have 4 main objectives: low unemployment, low inflation, high economic growth and an equlibrium for balance of payments. By looking at these 4 factors, performance of the UK's economy can be assessed.

The Bank of England produces a factsheet about the work that they undertake and their website also contains information on monetary policy, financial markets and financial stability.

All companies are part of the economy within the UK and they are, therefore, affected by both internal and external factors. The internal factors are in the Companies' control - staffing levels, costs etc, however external factors influence the companies' success but are outside of their control.

Further Information
The Citizens Connection website contains information on how the economy works.
The HM Treasury website contains details of its history as well as information about its 'Aims and Objectives'

Background Notes
The UK has a mixed economy because we have both a private and a public sector.

The public sector provides goods and services to the community through public corporations, local government and other statutory agencies. There is no real profit motivation as funding comes from taxes and government borrowing.

The private sector consists of businesses that are owned by private individuals who use their ownership to achieve objectives such as income through profits.

There are different forms of business within the private sector such as:

• sole traders - simplest kind of business as it is set up and run by an individual on their own. Examples: - plumber, newsagent.
  
• partnerships - where more than 1 person shares control in the company and contributes to the capital. Example - solicitors.
  
• private limited companies - a company which is registered under the Companies Act and is regarded as a separate legal entity Example - AAABBB Limited.
  
• public limited companies - companies that are floated on the Stock Exchange, so that share can be sold to the public to raise funds. Example - AAABBB Plc.
  

Project Work
Ask the students to research the 4 different types of private sector business listed above. If they were going to start a business, what would be the advantages and disadvantages of each type?

Background Notes
A major influence on any business is the level of competition within a particular industry. Competition is good for consumers as it helps to regulate the prices that businesses charge for the goods and services they well. The competition that a business faces constantly changes as new business join or leave the industry.

There are different levels of competition:

• Perfect competition - large number of buyers and sellers and individual firm or consumer does not affect the market price.
  
• Oligopoly - only a few firms producing goods so there is a real push to secure consumers' interests.
  
• Monopoly - only 1 firm producing goods/services and dominates the market.

There is a body of law in place that aim to counter any push by firms to reduce or eliminate competition. Competition is believed to be good for the consumer and there are laws which prevent anti-competitive behaviour and which regulate a reduction in number of businesses. Example - Restrictive Trade Practices Act and the Competition Act.

Research work
Ask your students to research into the competition law that is currently in force. Who enforces these laws and how are they regulated?

Tell the students to start their research by looking at the website for the Office of Fair Trading

Background Information
Marketing is very important to all companies as they need to sell the products that they produce and in order for consumers to buy, they need to be aware what exists.

Businesses will develop a corporate strategy or marketing plan that sets out exactly what they wish to achieve. In order to produce this a company may undertake market research whereby they collect information about the market they wish to serve.

Advertising
This is the main way in which businesses try to draw consumers' attention to the products that they are selling and to encourage them to buy those products.

A lot of advertising is mainly concerned with capturing the interest of the audience rather that telling them all about the product. They may use persuading tactics such as:

• Better Lifestyle - if you buy their product you life will be better for it.
  
• Fear - you need this product to keep you safe.
  
• Romance - you will be attractive to the opposite sex if you buy this product.
  
• Personality - uses famous stars to encourage you to buy.

There are many different types of advertising medium that a business can use and they will choose the ones that they consider to be most suitable for what they are tying to achieve:

• Television
  
• Radio
  
• Magazines
  
• National and Local Press
  
• Road side posters

There are controls on advertising designed to protect the consumer from untrue or indecent advertising. There are controls laid down by statute such as the
Trade Descriptions Act, Obscene Publications Act and the Children and Young Persons (Harmful Publications) Act. Protection also exists from the Control of Misleading Advertisements Regulations.

The majority of businesses in the UK also adhere to voluntary codes of practice which are enforced the Advertising Standards Authority.

The Codes set out different provisions for advertisers and the main one is that all adverts should be 'decent, honest, legal and truthful'.

Adverts on television are controlled by the Independent Television Commission and radio adverts are checked by the Radio Authority.

Project work
Ask the students to look at a range of different adverts in papers and on television. Which adverts make them what to buy the products? Is the product aimed at their age group? If not, who do they think the adverts are aimed at?

Roleplays and Worksheets
The Smart Shopper's Guide was written by Essex County Council Trading Standards (and has been adapted for the Internet by Oxfordshire County Council Trading Standards Service). It contains a section on Advertising which contains teaching notes, roleplays and worksheets.

Teaching Notes and Activities