I spent more money on ________ than anything else.

The reason is …

Additional JOURNAL TOPIC

Personal Consumer Rating

1. If you were given $1,000 today, what would you do with it?

2. Do you check your receipts to make certain that you have been charged correctly?

3. Do you count your change to make certain that it is correct?

4. Do you compare different prices and brands of the same item at more than one store, then select the best value to purchase?

5. Do you compare the warranties of different brands when selecting a brand to purchase?

6. If you feel you have been wronged by a business, do you complain to the business and attempt to right the wrong?

7. Do you find your self buying things that you had not planned to buy?

8. Do you save money regularly?9. Do you often find yourself

borrowing money from parents, friends or siblings?

10. Do you keep a record of what you earn and what you spend?

11. Do you shop sales?12. Do you read the instructions for

use and care of a product and follow them?

13. Do you keep your sales receipts, warranties, and instructions?

14. Do you read the store’s return and exchange policy before making your purchase?

On question #1, give yourself five points if you selected something to do with your money that is consistent with your goals and values in life.

Give yourself two points for each question you answered as follows:#2 Yes #6 Yes #10 Yes#3 Yes #7 No #11 Yes#4 Yes #8 Yes #12 Yes#5 Yes #9 No #13 Yes

#14 Yes

Rating

25-31 points Great! Keep up the good work!

19-24 points Fair. You should begin to make some changes.

14-18 points Not too good. Considermaking some big changes.

Less than 14 Hope you took good notes, you’ll need them!!!

What your score means!

ECONOMICS AND THE CONSUMER

Key Word Review

Scarcity◦ Term used to indicate that no society has enough

resources to satisfy everyone’s wants and desires at a zero price

Trade-Off◦ That which has to be given up in order to get more

of something else. One trades off things for things, money for things, time for time, and so on. Every choice in a world of scarcity is a trade-off

• We may be living tin the richest nation on earth, but that doesn’t mean we have unlimited, resources.

• Every person, business, city , state and country faces the problem, of scarcity:

• No society has enough resources to satisfy everyone’s wants and desires at a zero price for those resources.

• Even if your were the richest person on earth, you would still face scarcity

• You would not have enough time to do everything you want to do because when you are doing one thing, obviously you cannot be doing another.

• Scarcity forces us, as consumer , to make choices all the time.

• We must choose how we spend our time, what type of work we do, and how we spend our income.

• You have to decide whether to purchase an outfit this month or save the money for a car.

• Make a trade-off

Barter◦ The exchange of goods or services without the use

of money◦ For example: I give you two pencils for one eraser

Opportunity Cost◦ The cost of doing something, measured by the

most valuable alternative you give up in spending your time and/or money on a particular product or activity

◦ For example: being in this class verses wages you would receive if you were working for pay instead

Supply◦As the price goes up, so does the quantity supplied

◦As the price goes down, so does the quantity supplied

Demand◦As the price rises, the quantity demanded of goods and services will fall

◦As the price falls, the quantity demanded will rise

Ask yourself: ◦How much work would I be willing to

perform after school at $1 per hour? ◦At $5 per hour? ◦At $100 per hour. ◦Isn’t it true that you would be willing to

supply more of your labor at higher pay?

Supply:

Consider the purchase of CDs, normally you purchase two CDs per month and they cost $15 each.

If the price were to go up, and you continue to by the CDs each month some point you would not have any money left over to purchase food, clothing or other types of entertainment.

Demand:

If it is in RED you must write it down

Terms

Consumer◦Individuals who purchase (or are given), use, maintain, and dispose of products and services

◦We are all consume—in one way or another

Exchange◦Giving of one thing for another◦Can take place among individuals and among nations

◦Typically you exchange your labor services for money—income

◦Then you exchange your money for goods and services that you want to purchase

Exchange is ultimately the

result of all the choices we make as consumers

Food and Drug Administration FDA:• A Federal agency that was formed to set and

enforce safety standards for food, drugs, and cosmetics.

• They have the authority to stop the sale of an item under their jurisdiction, if it is found to be harmful or hazardous.

• They may also require safety warnings to be placed on harmful or hazardous products.

• This is the agency which tests new drugs and medications before they are put on the market.

Better Business Bureau (BBB):

• A non-profit organization sponsored by local businesses.

• It offers a variety of consumer services at no charge to help with consumer complaints.

• It can provide consumer education materials, answer consumer questions, and provide general information about a company’s consumer complaint record

Consumer Product Safety Commission

(CPSC):• A federal agency that was formed to set and enforce safety standards of products such as household appliances, toys and tools.

• If a product under the jurisdiction of the CPSC is found to be harmful or hazardous, they can prevent that products from being sold, or they can require the manufacturer to repair or replace the product.

• The CPSC will also investigate complaints from consumers about products.

Federal Trade Commission (FTC):

• A federal agency which was formed to protect consumers against false advertising, illegal sales schemes, and all unfair trade practices.

Bureau of Consumer Protection:

• A federal agency which provides sate and local consumer protection offices which help answer consumer questions or problems.

• Many offices enforce consumer protection and fraud laws.

• They can help resolve consumer complaints and provide consumer education materials.

Monopoly

• A market situation in which only one organization produces the entire output of an industry or sells a product or service for which there is not substitute.

Service

• Work performed to meet the needs of those buying the work, such as repair work, personal grooming services, house cleaning, and transportation.

• This also includes the professional services of doctors, lawyers, teachers, etc.

• Something that is intended to satisfy some wants or needs of a consumer and thus has economic utility.

• It is normally used in the plural form—goods—to denote tangible commodities such as products and materials.

Goods

Needs

• The basic items a person must have to survive.

Comparison Shopping

• Looking at different brands and models of the same item in various stores to compare price, quality, features, and store services before buying.

Second

• A product that does not meet the standard requirements.

• It is sometimes labeled irregular and may contain minor flaws of imperfections.

Name Brand

• A brand name that is widely recognized and sold in many different stores.

• Because of extensive advertising, the name is associated with quality..

Store Brand

• A brand owned by a particular store or chain of stores.

• The store will either manufacture their own product and put their name on it, or purchase the product from a manufacturer with the right to place their own name on the product.

• For example: Food Club Brand

Generic Brand

• Surplus products purchased form many different manufacturers and then labeled with plain white and black labels stating what the product is and giving necessary information. Since the product comes from many different manufactures, the quality varies greatly.

Warranty

• A statement made by a manufacturer or seller of a product or service concerning the responsibility for quality, characteristics, and performance of the product or service.

Full Warranty

• Repair or replacement must be free, in a reasonable amount of time, without placing unreasonable demands on the consumer.

Limited Warranty

• May require the consumer to pay labor fees or handling charges and may require the consumer to ship the product to the seller or an authorized service dealer for repairs.

Implied Warranty of Merchantability

• The product actually is what it is called and does what its name implies.

Implied Warranty of Fitness

• The product is fit for any performance or purpose promised by the seller and that there are no defects in the product at the point of sale.

Unfair Trade Practice:

• Any business practice which is considered unethical or illegal.

Consumption of goods more for their ability to impress others than for the inherent satisfaction they yield

Buying and using consumer goods ostentatiously

Ostentation = showy

Conspicuous Consumption

◦A way to reach decisions in which all cost are added up , as well as all the benefits.

◦Rational consumer decision making

Cost/Benefit Analyses