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38 Cards in this Set
- Front
- Back
Consumer Economics
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The study of economic interactions of consumers w/ their external environment.
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Consumer
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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) |
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As a consumer...
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1. Understand issue
2. Know facts 3. Seek Info 4. Act accordingly |
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Spending
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Consuming (tangible and intangible)
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Earning
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Making money
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Utilizing
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making use of all economic/material possessions (money&property) and non economic/non material possessions (time)
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Borrowing
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borrowing
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Saving
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- Consumers discovered joys of parsimony
- The paradox of thrift and prudence; private virtue, but public threat |
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Investing
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(Involves risk) Committing money or property that you could win or lose
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Propensity to Consume
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- 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. |
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APC
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Average Propensity to Consume
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MPC
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Marginal Propensity to Consume
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Economic System
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A mechanism by which land (natural resources), labor and capital are bought together in order to produce and then allocate G&S to people
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3 Basic ?'s About Economic Systems
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- What G&S will be produced?
- How will they be produced? - Who will be the end use of the G&S? |
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Types of Economic Systems
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- Capitalism: Private ownership
- Socialism: Govt. controlled |
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Four groups in US Economy: Group 1
-Consumers |
Maximize utility w/ G&S
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Four groups in US Economy: Group 2
-Producers |
Maximize profits thru sales of G&S
(Privatizing gains/ profits, socializing loss/costs) |
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Four groups in US Economy: Group 3
-Government |
Promotes safety and welfare of public
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Four groups in US Economy: Group 4
-Foreign Market |
Provides products and external markets for US G&S
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Consumer Sovereignty
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Market situation where consumers have the power to ultimately decide which G&S society will produce and consume.
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Assumptions for Consumer Sovereignty
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1. Man is a rational being.
2. Consumers have perfect information. |
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Producer Sovereignty
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Producers have the power to decide which G&S society will produce and consume.
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Consumer Choice
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Market condition that exists when consumers are presented w/ options from which they can choose to buy or not.
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Consumer Attitudes
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Indicators of economic confidence
(Consumer Confidence Index) |
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Index of Leading Economic Indicators
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Summary of Economic Components-
EX. New orders for consumers G&S, new business formation, new housing start, initial unemployment insurance, etc. |
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Measure of Economic Growth
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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 |
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Personal Income (Gross)
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From all sources: salary, wages, rent, profit, transfer payments (SS, TANF, etc.)
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Disposable Personal Income (Net)
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Amount left over for consumers deducting personal taxes from personal income.
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Discretionary Income
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Money left over for consumers to spend on G&S
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1. Surplus
2. Deficit |
1. When revenues exceed expenditures.
2. When government expenditures exceed revenues. |
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Freedom of Choice
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1. Free Entry
2. Free Info 3. Price System |
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In a Free-Choice Economy
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1. Wealth (+ effects)
2. Nealth (neutral effects) >ex. DO, Mouthwash 3. Illth (- effects) >ex. cigarettes, drugs, excessive alcohol |
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Economic Freedom
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Consumers implied right to choose the G&S that they want.
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+ Freedom of Choice
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right to consume anything you want along w/ purchasing power necessary to implement that right
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- Freedom of Choice
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want to buy it, but unable to, due to lack of purchasing power
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Customs
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Behavior long-established. Passed form generation to generation. Regulates lives of consumers since they maintain consumers' range of choice
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Customs remain because of:
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-Inertia
-Certain Institutions-Religions -Certain Groups-wealthy & powerful -Isolation -Illiteracy |
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Customs dictated by Culture break with:
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-Education
-Media -Mobility |