Chapter 3 Your Role as a Consumer

Section 3-1: Consumption, Income and Decision Making 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.  Education, occupation, experience, health, location, and wages can all influence a person’s ability to consume.  Spending income requires constant decision making.

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.

Section 3-2: 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  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  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

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

Section 3-3: Consumerism 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

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  These 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  Only return products with legitimate faults