Chapter 3 Your Role as a Consumer

Consumption, Income, and Decision Making Chapter 3 Section 1 Consumption, Income, and Decision Making

Disposable Income Consumer: any person or group that buys or uses goods and services to satisfy personal needs and wants A person’s role as a consumer depends on their available income and how much of it is spent or saved. Disposable income: income remaining for a person to spend or save after all taxes have been paid.

Discretionary Income Discretionary income: money income a person has left to spend on extras after necessities have been bought Discretionary income is spent on luxury items or entertainment. Spending income requires constant decision making.

Decision Making as a Consumer Making consumer decisions involves three parts. Deciding to Spend Your Money Deciding on the Right Purchase Deciding How to Use Your Purchase

Deciding to Spend Your Money 2 resources are involved: income and time. Before you spend money, you need to invest time in obtaining information about the product. Remember time is a cost to you. If you invest time researching a product, you cannot get that time back.

Deciding on the Right Purchase Choosing between a low, medium, or high quality product. This is why research is important: the low or medium quality item might meet your needs as well as the high quality item and it will save you money. When you make consumer decisions base on opportunity cost, you are engaging in rational choice.

Deciding How to Use Your Purchase Once you own something you must decide how much time it takes to repair and maintain. You should know when you need to replace the item. You should know at what point the item will become obsolete.

Decision Making as a Consumer Choose the best quality item that is the least expensive and will satisfy your wants. Rational consumers all make different choices.

Buying Principles or Strategies Chapter 3 Section 2 Buying Principles or Strategies

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.

Using Advertising Wisely Advertising is everywhere. Three common types of advertising: Competitive Advertising= advertising that attempts to persuade consumers that a product is different from and superior to any other Informative Advertising= advertising that benefits consumers by giving information about a product Bait and Switch= advertising 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 form different stores and companies Use information obtained from other stores to negotiate a lower price. Consider the different product warranties. Compare the value of generic to brand name products.

Chapter 3 Section 3 Consumerism

Consumer Rights Consumerism: movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers Business are now responsible for product safety, healthful food, and accurate advertising.

Consumer Rights Since 1962, consumers have the right to product safety, to be informed about their product, to choose from a variety or products, and the be considered in making laws about products.

Help for Consumers People can complain to store managers and manufactures when dissatisfied with a product. The Better Business Bureaus give information on products and help to settle buyer and seller disagreements.

Help for Consumers There are magazines and private consumer groups that provide helpful information on products. Federal agencies require consumer notification and warranties.

Consumer Responsibilities Be informed about purchases. Consumers need to initiate the problem-solving process when a product or service is faulty. Practice honest and ethical behavior.

Consumer Responsibilities Only return products with legitimate faults. Ethical behavior: acting in accordance with moral and ethical convictions about right and wrong