Unit 2 Overview

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Unit 2 Overview
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Chapter 3 Consumerism
Chapter 4 Debt
Chapter 5 Budgeting/Shopping
Chapter 6 Saving/Investing
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Types of Income

• Income - Any money taken in by an individual or
  business
• Disposable income - Money left over after taxes
  have been paid
• Discretionary income - Money left over after
  necessities are paid for

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Making a Buying Decision

• 3 Steps
• Deciding to spend your money
• Deciding on the right purchase
• Deciding how to use the purchase

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Making a Buying Decision

• Decisions are made based on opportunity cost
• Price vs. Quality
• Rational choice - the choice that has the best
  perceived value
• Rational choice is relative to the consumer One
  consumers rational choice may not be the same as
  anothers

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Comparison Shopping

• The process of gathering information from several
  stores or companies before making a purchase
• Issues to consider
• Price
• Warranties - A promise to repair a product
• Brand name vs. generic

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Advertising

• Competitive Advertising - Purpose is to take
  customers away from competitors
• Often try to appeal to consumers emotions
• Informative Advertising - Purpose is to provide
  information to customers about a product

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Assignment

• Work by yourself or with one partner, create two
  advertisements for a product
• One advertisement must be competitive
• One advertisement must be informative
• The advertisements must be for the same product

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Advertising

• Bait and Switch -
• An item is advertised at unrealistically low
  price. (BAIT)
• When consumer arrives at store, item is sold out.
• Sales person then directs consumer to
  higher-priced items (SWITCH)
• Bait and switch is ILLEGAL

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Consumers Bill of Rights

• Right to safety
• Right to be informed
• Right to choose
• Right to be heard
• Right to redress - obtain payment for damages

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Important Federal Agencies

• Refer to page 74 for details
• Federal Trade Commission (FTC)
• Consumer Product Safety Commission (CPSC)
• Department of Agriculture (DOA)
• Food and Drug Administration (FDA)
• National Highway Traffic Safety Administration
  (NHTSA)