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Your Role as a Consumer

Your Role as a Consumer. Chapter 3. Consumption, Income, and Decision Making. Consumer : Any person or group that buys or uses goods and services to satisfy personal wants Purchases are based on income and how much is chosen to spend or save.

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Your Role as a Consumer

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  1. Your Role as a Consumer Chapter 3

  2. Consumption, Income, and Decision Making • Consumer: • Any person or group that buys or uses goods and services to satisfy personal wants • Purchases are based on income and how much is chosen to spend or save

  3. Consumption, Income, and Decision Making • Disposable Income • The money left over after taxes have been paid • Usually buy necessities first: food, clothing, and housing • Discretionary Income • Income which can be spent on extras such as entertainment and luxuries

  4. Consumption, Income, and Decision Making Factors that impact a person’s earning power: • Education • Age • Health • Occupation • Inheritance ($, property) • Gender • Location • City dwellers earn more than rural areas • Regional incomes vary

  5. Consumption, Income, and Decision Making • Decision Making • Do I by an item or not? • Scarce resources (time and money) • Time spent on deciding what to buy • Opportunity Cost (value of the highest alternative choice you DIDN’T make) • High quality product cost more than comparable low quality product • Rational Choice (when you make consumer decisions based on opportunity costs or the alternative that has the greatest value) • Choosing the item that is the least expensive from among comparable quality products • Choice varies from person to person (What do you value??)

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