iTunes folder question

I purchased a MacBook Air a couple nights ago. I am wanting to redirect the folder that iTunes makes on the hard drive, I want to put that folder on my external hard drive. How can I do that? I do realize that every time I download music my external hard drive would need to be plugged in. Im fine with that. I've tried playing around with it but have had no luck. Any help is appreciated.

 

Thanks for the help. I did get to the preference then advance tab section. I did change the folder to the external hard drive. What was throwing me off was that I was trying to download some music that I have previous purchased from iTunes, and it was telling me something along the lines of, I didn't have permission to change the location. But when I changed the folder back to my hard drive it would allow me to download the music.