Transcript Presentation Plus!

Reader’s Guide (cont.)
Terms to Know
– consumer 
– disposable income 
– discretionary income 
– rational choice
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2
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information. Section 1 begins on page 59 of your textbook.
Introduction
• You and everyone around you are
consumers and, as such, play an
important role in the economic system. 
• A consumer is any person or group that
buys or uses goods and services to
satisfy personal needs and wants.
consumer
any person or group that buys or
uses goods and services to
satisfy personal needs and wants
3
Lecture Launcher
• For most of the 20th century athletes
were not paid the millions of dollars that
seem so commonplace today. In fact,
many players took a second job during
their off-season so they could pay their
bills. Yankees players Phil Rizzuto and
Yogi Berra even opened a men’s clothing
store. 
• Would you be more likely to visit a store
owned by a famous celebrity than one
owned by a non-celebrity? 
• Would you be willing to pay 10 percent
more for an item in the celebrity’s store?
4
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Disposable and Discretionary Income
• The ability to consume depends on a
person’s available income and how much
of it is spent or saved. 
• Disposable income is money left after
paying all taxes, whereas discretionary
income is money left after paying for
necessities or money that can be saved or
spent on luxury items.
5
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Disposable and Discretionary Income
(cont.)
• Education, occupation, experience,
health, location, and wages can all
influence a person’s ability to consume.
• Spending income requires constant
decision making.
6
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
Disposable and Discretionary Income
(cont.)
Figure 3.1
Consumer Spending
The circle graph
shows how Americans
spend their income.
Disposable and Discretionary Income
(cont.)
Figure 3.3
Earning Power
The number of
years you are
educated has
a direct effect
on your income.
Decision Making as a Consumer
• Whether or not to buy an item 
• Time costs—invest time in obtaining
information about the item 
• Opportunity costs—choosing between a
low-, medium-, or high-quality item 
• Rational choice is making a decision
based on opportunity costs. 
• Choose the best quality item that is the
least expensive and will satisfy your
wants. 
• Rational consumers will all make different
choices.
9
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Discussion Question
Think of a recent purchase you
made. 
What were the decisions you made
throughout the buying process?
While the purchases may vary, the
process should include whether or
not to buy the item, how much time
was invested in obtaining information
about the item, if they evaluated
opportunity costs, and if they felt their
choice was a rational one.
10
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Section Assessment
What kinds of products are
purchased with discretionary
income?
Discretionary income is used to
purchase extras such as luxury items
or entertainment.
11
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Section Close
Discuss the following: You are
thinking of hiring a disc jockey for a
school dance. What would you
consider in making this hiring
decision?
12
Reader’s Guide (cont.)
Terms to Know
– competitive advertising 
– informative advertising 
– bait and switch 
– comparison shopping 
– warranty 
– brand name 
– generic brand
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13
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Lecture Launcher
• Advertisements have a powerful effect on
consumer choice. Around 60 percent of
swimsuits purchased are never used for
swimming. Yet, Americans spend almost
$2 billion annually on them. 
• How many shops would you visit and how
much information would you gather before
purchasing a swimsuit?
14
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Gathering Information
• Takes time and research 
• Try to find out only what you need to
know. 
• Getting accurate information from a
salesperson is a life-long skill. 
• Use the Internet to research a product
and the companies selling it.
15
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Discussion Question
Name four major purchases in
which accurate information from a
salesperson would be helpful? 
What types of information might the
salesperson provide?
Answers will vary. Information should
relate to the product’s quality,
usefulness, competitive edge, and so
on.
16
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Using Advertising Wisely
• Advertising is everywhere. 
• Competitive advertisements try to
convince people one product is better
than another product and try to create
brand-name recognition or loyalty. 
• Informative advertisements provide
information about the product, such as
price or features. 
• Some advertisements use deceptive
tactics, such as bait and switch, to
present their products.
17
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Using Advertising Wisely
• They “bait” by advertising the item at a
low price, but say it is out of stock when
the consumer gets to the store. 
• They “switch” by trying to sell a higher
priced item instead, promoting its good
features over the out-of stock item.
18
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Discussion Question
Why do you think bait and switch
advertising is illegal?
If it were allowed, then people could
not trust any advertisements.
Consumer fraud hurts all companies
and their consumers.
19
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Comparison Shopping
• Compare different stores and companies. 
• Use information obtained from other stores
to negotiate lower prices. 
• Consider the different product warranties. 
• Compare the value of generic to brand
name products.
20
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Discussion Question
Consider the reasons that people
might have for shopping exclusively
at one store. 
When might this be better than
comparison shopping?
21
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Discussion Question (cont.)
Someone might shop exclusively at
one store because of its convenience
or because they like the service that
they receive. It can be better than
comparison shopping when the value
of service is more important to the
consumer. It can also be better when
the price difference is so small that to
comparison shop would take more
time than it’s worth.
22
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Section Assessment
What trade-offs occur when you are
gathering information?
Consumers trade time and effort
when gathering information. For
some consumers, time may also
represent money.
23
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Section Assessment (cont.)
Graphic Organizer Create a chart
like the one on page 70 of your
textbook to analyze and label at
least 10 advertisements as to
whether they are competitive or
informative.
Charts will vary.
24
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Section Assessment (cont.)
How can you learn to practice
comparison shopping?
You can practice comparison
shopping by gathering information on
the types and prices of products
available from different stores or
companies.
25
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Section Assessment (cont.)
Advertising Think of an
advertisement you’ve seen in the
past week. Analyze the ad by
applying it to the six points in Figure
3.7 on page 68. Was the ad
successful in influencing your
consumer behavior? Why or why
not?
Answers will vary.
26
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Reader’s Guide (cont.)
Terms to Know
– consumerism 
– ethical behavior
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listen to the Cover Story.
27
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information. Section 3 begins on page 72 of your textbook.
Lecture Launcher
• The National Consumers League,
founded in 1899, was the first American
consumer advocacy organization. They
work to protect consumers’ health and
safety and to promote fairness in the
marketplace. 
• Have you or anyone you know ever
contacted a consumer organization?
Why? 
• If you have never contacted a consumer
organization, do you think the existence of
these organizations has provided you with
any benefits?
28
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Consumer Rights
• Businesses are now responsible for
product safety, healthful food, and
accurate advertising. 
• Since 1962, consumers have the right to
product safety, to be informed about their
product, to choose from a variety of
products and to be considered in making
laws about products. 
• Consumers also gained the right to redress
or obtain payment for damages caused by
products.
29
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Discussion Question
Imagine what life was like before
consumer rights. 
How might shopping have been
different?
Consumers would have had no voice
when they received defective
products. They would have to have
been much more conscientious when
shopping, and might not have had a
choice in regard to the types of
products they could purchase.
30
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Help for Consumers
• People can complain to store managers
and manufacturers when dissatisfied with a
product. 
• Better Business Bureaus give information
on products and help to settle buyer and
seller disagreements. 
• There are magazines and private consumer
groups that provide helpful information on
products. 
• Federal agencies require consumer
notification and warranties.
31
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Consumer Responsibilities
• Be informed about purchases. 
• Consumers need to initiate the problemsolving process when a product or service
is faulty. 
• Practice honest and ethical behavior. 
• Only return products with legitimate faults.
32
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Discussion Question
When people return items that they
misused, claiming they were faulty,
they often think it hurts no one. 
How, in fact, does this behavior hurt
all consumers?
All consumers pay higher prices for
products when people return items
that they broke themselves. The
manufacturer will not just incur the
cost. Eventually the item’s price goes
up to make up for the manufacturer’s
loss.
33
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Section Assessment (cont.)
What private and federal help can
you receive as a consumer?
Private organizations give consumers
information on products and selling
practices; some help settle
disagreements between buyers and
sellers. Federal agencies set health
and safety requirements, inspect
products, promote free and fair
competition, and provide a great deal
of consumer information.
34
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Section Assessment (cont.)
What are your consumer
responsibilities?
Your responsibilities are to learn as
much about the product that you (the
consumer) wish to buy, to initiate the
problem-solving process if a product
is faulty, and to behave ethically in
dealing with producers and sellers.
35
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Section Assessment (cont.)
Consumerism Describe two
examples of how you educated
yourself about a product before
buying it.
Answers will vary.
36
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Section 1: Consumption, Income,
and Decision Making
• A consumer is any person or group that
buys or uses goods and services to satisfy
personal wants. 
• Income can be both disposable and
discretionary. 
• Education, occupation, experience, and health
can all make differences in a person’s earning
power and thus in his or her ability to
consume.
37
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Section 1: Consumption, Income,
and Decision Making (cont.)
• Making consumer decisions involves three
parts: (1) deciding to spend your money; (2)
deciding on the right purchase; and (3)
deciding how to use your purchase. 
• When you make consumer decisions based on
opportunity cost, you are engaging in rational
choice.
38
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Section 2: Buying Principles or
Strategies
• Three basic buying principles that can help
you obtain the most satisfaction from your
limited income and time are gathering
information, using advertising wisely, and
comparison shopping. 
• The value of your time and effort spent
gathering information should not be greater
than the value you receive from making the
best choice of product.
39
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Section 2: Buying Principles or
Strategies (cont.)
• Most advertising falls under one of two types:
competitive advertising or informative
advertising. Be aware of deceptive
advertising, which includes bait and switch. 
• To efficiently comparison shop, read
newspaper advertisements, make telephone
calls, surf the Internet, and visit different
stores. Also consider the product’s warranty,
and brand-name versus generic
manufacturers.
40
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Section 3: Consumerism
• Consumerism is a movement to educate
buyers about the purchases they make and to
demand better and safer products from
manufacturers. 
• Consumer advocates promote the following
consumer rights: the right to safety, to be
informed, to choose, to be heard, and to
redress. 
• Private groups that aid consumers include
local citizens’ action groups and the Better
Business Bureau.
41
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Section 3: Consumerism (cont.)
• Numerous federal agencies have programs
to aid consumers, including the Consumer
Product Safety Commission and the Food
and Drug Administration. 
• Consumers’ responsibilities include reading
contracts and warranties, following directions
for proper use of the product, initiating the
problem-solving process, and exhibiting
ethical behavior.
42
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Recalling Facts and Ideas
Before you buy anything, what three
questions should you ask yourself?
Do I really need this? Is it worth the
time? Is there any better use for my
money?
43
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Recalling Facts and Ideas (cont.)
Do all rational consumers think
alike? Why or why not?
No. People disagree about what
generates the greatest value for any
expenditure.
44
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Recalling Facts and Ideas (cont.)
What are three important buying
principles?
Three important buying principles are
gathering information, using
advertising wisely, and comparison
shopping.
45
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Recalling Facts and Ideas (cont.)
What are two types of advertising?
Two types of advertising are
competitive advertising and informative
advertising.
46
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Recalling Facts and Ideas (cont.)
How much information should you
obtain before you make a purchase?
You should gather enough information
to make an informed choice.
47
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Recalling Facts and Ideas (cont.)
What are the four consumer rights
that President John F. Kennedy
stated?
The four consumer rights are the
rights to safety, to be informed, to
choose, and to be heard.
48
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Recalling Facts and Ideas (cont.)
What are two consumer
responsibilities?
Answer will vary.
49
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Thinking Critically
Understanding Cause and Effect
Create a diagram like the one on
page 78 of your textbook to explain
how education, occupation, and
location make a difference in a
person’s earning power.
Better education, higher-paying
occupation, and city location lead to
higher earning power. Lower levels of
education, lower-paying occupation,
and rural location lead to reduced
earning power.
50
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Thinking Critically (cont.)
Making Generalizations Why do
some people buy brand-name
products and other people buy
generic products? What are the
trade-offs involved in this decision?
Answers will vary.
51
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Reviewing Skills
Distinguishing Fact From Opinion Analyze the
advertisement below, then answer the questions that
follow.
WE DELIVER!
Air freight. Ocean service. Less-than-truckload. Full truckload. Nationally. Globally.
We’re a group of market-leading businesses
that deliver in a “need-it-now” world.
We’re a $5 billion company, with 33,000 people,
25,000 pieces of equipment, up to 100 jet
freighters, and the industry’s most advanced
information systems.
52
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Reviewing Skills (cont.)
Which of the statements in the ad
are based on facts? Explain.
The following phrases are based on
facts: “Air freight. Ocean services.
Less-than-truckload. Full truckload.
Nationally. Globally”; “We’re a $5 billion
company, with 33,000 people, 25,000
pieces of equipment, up to 100 jet
freighters.” They can be checked by
looking at statistics available in
company industry records.
53
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Reviewing Skills (cont.)
Which of the statements are based
on opinion? Explain.
The following statements are based
on opinion: “market-leading
businesses” and “industry’s most
advanced information systems.” They
are value judgments.
54
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What manufacturer’s agreement
allows you to return a watch for free
repair during a stated period?
warranty
55
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Identify a product you have recently purchased.
Before making your purchase, what
questions did you ask yourself and others,
and what information did you look for? 
Why did you buy this particular item and not
another? 
Do you think you acted wisely in making
your purchase? Why or why not?
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to display the next question.
Explore online information about the
topics introduced in this chapter.
Click on the Connect button to launch your browser and go to the
Economics: Today and Tomorrow Web site. At this site, you will find
interactive activities, current events information, and Web sites
correlated with the chapters and units in the textbook. When you
finish exploring, exit the browser program to return to this
presentation. If you experience difficulty connecting to the Web site,
manually launch your Web browser and go to
http://glencoe.com/sec/socialstudies/economics/econtoday2005/i
ndex.php
Explore online information about the
topics introduced in this chapter.
Click on the Connect button to launch your browser and go to the
BusinessWeek Web site. At this site, you will find up-to-date
information dealing with all aspects of economics. When you
finish exploring, exit the browser program to return to this
presentation. If you experience difficulty connecting to the Web
site, manually launch your Web browser and go to
http://www.businessweek.com
Grab Some Cash,
Check Out a Flick
The ATM at the Rock and Roll Hall of fame in
Cleveland, Ohio, plays music, not advertisements.
Shaped like a jukebox, the ATM blasts snippets of
rock songs while it dispenses cash. Banks are not
rushing to install musical cash machines,
however. The jukebox model costs about $37,000
to manufacture.
Read the BusinessWeek Grab Some Cash, Check
Out a Flick article on page 71 of your textbook.
Continued on next slide.
This feature is found on page 71 of your textbook.
Grab Some Cash,
Check Out a Flick
Where has advertising now
appeared?
Advertising has now appeared on the
screens of ATMs.
Continued on next slide.
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answer. This feature is found on page 71 of your textbook.
Grab Some Cash,
Check Out a Flick
Do you think this type of advertising
would have an effect on your consumer
decisions? Why or why not?
Answers will vary.
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answer. This feature is found on page 71 of your textbook.
Continued on next slide.
Continued on next slide.
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Economics and You
Video 9: Your Role as a
Consumer
After viewing Your Role as a Consumer, you
should be able to… 
• compare and contrast disposable and
discretionary income. 
• identify aspects of wise consumer decision
making. 
• describe some federal consumer protection
activities.
Continued on next slide.
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information.
Economics and You
Video 9: Your Role as a
Consumer
Disc 1, Side 1
Chapter 9
Click the Videodisc button
anytime throughout this
section to play the complete
video if you have a videodisc
player attached to your
computer.
Click the Forward button to
view the discussion questions
and other related slides.
Click inside the box to play the preview.
Continued on next slide.
Economics and You
Video 9: Your Role as a
Consumer
What is a consumer?
A consumer is a person
who purchases goods and
services.
Disc 1, Side 1
Chapter 9
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to display the answer.
Distinguishing Fact
From Opinion
Distinguishing fact from opinion can help you
make reasonable judgments about what
others say and write. Facts can be proved by
evidence such as records, documents, or
historical sources. Opinions are based on
people’s differing values and beliefs.
Continued on next slide.
This feature is found on page 65 of your textbook.
Distinguishing Fact
From Opinion
Learning the Skill
• Read or listen to the information carefully.
Identify the facts. Ask: Can these statements
be proved? Where would I find information to
verify them? 
• If a statement can be proved, it is factual.
Check the sources for the facts. Often
statistics sound impressive, but they may
come from an unreliable source.
Continued on next slide.
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information. This feature is found on page 65 of your textbook.
Distinguishing Fact
From Opinion
Learning the Skill (cont.)
• Identify opinions by looking for statements of
feelings or beliefs. The statements may
contain words like should, would, could, best,
greatest, all, every, or always.
Continued on next slide.
This feature is found on page 65 of your textbook.
Distinguishing Fact
From Opinion
Practicing the Skill
• Read the excerpt on page 65 of your
textbook, then answer the questions on the
following slides.
Continued on next slide.
This feature is found on page 65 of your textbook.
Distinguishing Fact
From Opinion
What are three factual statements in
the passage?
The robot is priced at $2,000; it is called
AIBO; aibo is a Japanese word for
“companion”; AIBO is also short for
Artificial Intelligence Robot; AIBO is a
robotic dog.
Continued on next slide.
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answer. This feature is found on page 65 of your textbook.
Distinguishing Fact
From Opinion
Which statements are opinions?
Explain.
almost certainly the world’s most sophisticated
entertainment robot; AIBO is just smart enough not
to fall off the edge of a table; such companions could
be running errands, helping with household chores,
and assisting the handicapped. Phrases such as
“almost certainly,” “most sophisticated,” “just smart
enough,” and “could be” act as signals for opinions.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 65 of your textbook.
Studies reveal that Americans are bombarded
with 3,000 to 5,000 advertising messages a day.
The assault is so overwhelming that people
scarcely notice most of these messages.
Oprah Winfrey
1954–
Click the picture to listen to
the selection on page 76 of
your textbook to find out
more about Oprah Winfrey.
Be prepared to answer
questions that appear on
the next two slides.
Continued on next slide.
This feature is found on page 76 of your textbook.
Oprah Winfrey
1954–
What corporation
does Oprah head?
HARPO Entertainment
Group
Continued on next slide.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 76 of your textbook.
Oprah Winfrey
1954–
In what ways does Oprah
try to help others?
She makes generous
donations to charities and
encourages her viewers to
“practice random acts of
kindness.”
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 76 of your textbook.
End of Custom Shows
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