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38 Cards in this Set

  • Front
  • Back
Consumer Economics
The study of economic interactions of consumers w/ their external environment.
Consumer
One who acquires G & S for the ultimate consumption.
(Ultimate purpose for all economic activity is to satisfy consumer wants-provide G&S to consumer)
As a consumer...
1. Understand issue
2. Know facts
3. Seek Info
4. Act accordingly
Spending
Consuming (tangible and intangible)
Earning
Making money
Utilizing
making use of all economic/material possessions (money&property) and non economic/non material possessions (time)
Borrowing
borrowing
Saving
- Consumers discovered joys of parsimony
- The paradox of thrift and prudence; private virtue, but public threat
Investing
(Involves risk) Committing money or property that you could win or lose
Propensity to Consume
- Consumption expenditure--->based on level of disposable income.
- Relationship between consumption expenditure and income is consumption function or propensity to consume.
- Difference between income and consumption is saving.
APC
Average Propensity to Consume
MPC
Marginal Propensity to Consume
Economic System
A mechanism by which land (natural resources), labor and capital are bought together in order to produce and then allocate G&S to people
3 Basic ?'s About Economic Systems
- What G&S will be produced?
- How will they be produced?
- Who will be the end use of the G&S?
Types of Economic Systems
- Capitalism: Private ownership
- Socialism: Govt. controlled
Four groups in US Economy: Group 1
-Consumers
Maximize utility w/ G&S
Four groups in US Economy: Group 2
-Producers
Maximize profits thru sales of G&S
(Privatizing gains/ profits, socializing loss/costs)
Four groups in US Economy: Group 3
-Government
Promotes safety and welfare of public
Four groups in US Economy: Group 4
-Foreign Market
Provides products and external markets for US G&S
Consumer Sovereignty
Market situation where consumers have the power to ultimately decide which G&S society will produce and consume.
Assumptions for Consumer Sovereignty
1. Man is a rational being.
2. Consumers have perfect information.
Producer Sovereignty
Producers have the power to decide which G&S society will produce and consume.
Consumer Choice
Market condition that exists when consumers are presented w/ options from which they can choose to buy or not.
Consumer Attitudes
Indicators of economic confidence
(Consumer Confidence Index)
Index of Leading Economic Indicators
Summary of Economic Components-
EX. New orders for consumers G&S, new business formation, new housing start, initial unemployment insurance, etc.
Measure of Economic Growth
GDP (Gross Domestic Product)
-Total value of all G&S produced in the US regardless of ownership, over a period of time, such as one year, and measured in dollars.
1. Real GDP-figured has been adjusted for inflation
2. Per Capita GDP- take the figure and divide it by each person.
3. Per Capita Real GDP- combination of both
Personal Income (Gross)
From all sources: salary, wages, rent, profit, transfer payments (SS, TANF, etc.)
Disposable Personal Income (Net)
Amount left over for consumers deducting personal taxes from personal income.
Discretionary Income
Money left over for consumers to spend on G&S
1. Surplus
2. Deficit
1. When revenues exceed expenditures.

2. When government expenditures exceed revenues.
Freedom of Choice
1. Free Entry
2. Free Info
3. Price System
In a Free-Choice Economy
1. Wealth (+ effects)
2. Nealth (neutral effects)
>ex. DO, Mouthwash
3. Illth (- effects)
>ex. cigarettes, drugs, excessive alcohol
Economic Freedom
Consumers implied right to choose the G&S that they want.
+ Freedom of Choice
right to consume anything you want along w/ purchasing power necessary to implement that right
- Freedom of Choice
want to buy it, but unable to, due to lack of purchasing power
Customs
Behavior long-established. Passed form generation to generation. Regulates lives of consumers since they maintain consumers' range of choice
Customs remain because of:
-Inertia
-Certain Institutions-Religions
-Certain Groups-wealthy & powerful
-Isolation
-Illiteracy
Customs dictated by Culture break with:
-Education
-Media
-Mobility