YOUR ROLE AS A CONSUMERChapter 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
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
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
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??)