Transcript Economics Chapter 3 v 2_0

Your Role as a
Consumer
Chapter 3
Consumption, Income, & Decision Making
Consumer – a person or group that buys
or uses goods and services to satisfy
personal needs and wants
 Role as a consumer depends on your
ability to consume which depends on
income.
 Disposable Income – income remaining for
a person to spend or save after all taxes
have been paid
 Discretionary Income – money income a
person has left to spend on extras after
necessities have been bought

Consumption, Income, & Decision Making
 Earning
power dependent on:
– Education
– Occupation
– Experience
– Health
– Location
Consumption, Income, & Decision Making

Decision Making as a Consumer
– First decision a consumer must make is
whether to buy an item or not.
– Figure 3.4 on page 63 is important!
– Scarce resources – income & time (comparison
shopping)
– Opportunity cost – Will you purchase a high or
low quality product?
– Rational Choice – choosing the alternative that
has the greatest value from among products
that are comparable in quality
Buying Principles or Strategies
 Gathering
Information
– How much information about a product
or service do you need? Gathering
information involves time. Time and
effort should not be greater than the
value received.
– Learn as much about a product or
service as possible (Internet &
consumer reports)
Buying Principles or Strategies

Using Advertising Wisely
– Competitive Advertising – advertising that
attempts to persuade consumers that a
product is different from and superior to any
other. Try to take customers from competitors
or keep customers from competitors.
– Informative Advertising – advertising that
benefits consumers by giving information
about a product (price, quality or special
features)
– Bait and Switch – ad that attracts consumers
with a low-priced product, then tries to sell
them a higher-priced product.
Comparison Shopping




Comparison Shopping – getting information on
the types and prices of products available from
different stores and companies (newspapers,
internet, telephone calls or visit stores)
Warranty – promise made by a manufacturer or a
seller to repair or replace a product within a
certain time period if it is found to be faulty
Brand Name – word, picture, or logo on a product
that helps consumers distinguish it from similar
products
Generic Brand – general name for a product
rather than a specific brand name given by the
manufacturer
Consumerism
Consumerism – movement to educate
buyers about the purchases they make
and to demand better and safer products
from manufacturers
 Consumer Rights

– 1.
Right to Safety
– 2.
Right to be Informed
– 3.
Right to Choose – need markets to be
competitive
– 4.
Right to be Heard
– 5.
Right to Redress – obtain money or
goods for financial or physical damages
Consumerism

Consumer Responsibilities
– 1.
Report the problem immediately
– 2.
State the problem and suggest a solution
– 3.
Include details such as receipts, guarantees and
contracts
– 4.
Describe what you may have done to correct
the problem
– 5.
Keep a record of efforts to solve the problem
– 6.
Allow reasonable time to solve the problem
– 7.
Contact manufacturer in writing if necessary
and keep a copy
– 8.
Keep cool
Ethical behavior – acting in accordance with moral and
ethical convictions about right and wrong
Consumerism
 Help
for Consumers
– Complain to store manager or write to
the manufacturer
– Small claims court
– Hire a lawyer
– Private and government agencies
 Better
Business Bureau
 Agencies on page 74