August Tuesday, 15
Went over syllabus.
Thursday, August 18
Chapter 1: Consumers in a Changing World
Economy: Comes from the Greek world for one who manages a household. This tended to be
the woman.
Economics: The study or science of production, distribution, and consumption (Goldman). The
study of how society manages its scarce resources (Miller).
Scarcity: A society has limited resources and therefore cannot produce all the goods and services
people wish to have; things run out.
The way that a society manages its resources is important because they are scarce.
Scarcity implies choice and choice implies cost.
Example: Georgia is in another drought now, so water (a resource) is scarce. This also
will affect Floridas oyster beds getting water, which in turn will increase the price of
oysters.
Economists study
How people make decisions.
How people interact with each other.
The forces and trends that affect the economy as a whole.
Consumer Economics: The study of how people deal with scarcity, fulfill needs, and selected
among alternative goods, services and actions.
Leads to careers in consumer protection, consumer advocacy, policy making, education,
law, business, management, government, marketing, etc.
Why Study?
o To apply course knowledge to social issues.
o To overcome passivity, to understand and own your place in the economy.
o To become a Consumer Protection Advocate (Examples: Ralph Nader with the
automobile industry and Erin Brockovich with ground water in California Saw
YouTube Videos on both.)
o The government does not always do what it should to help the consumer. For
example, the Bonus Army War in Washington D.C. began because of unpaid
bonuses to war veterans during the Great Depression. They had been promised
bonus checks by the government, but were not being paid them when they needed
it most. Another example would be the Kent State tragedy on May 4, 1970.
Students were on campus protesting the Vietnam War. Things escalated and the
National Guard ended up killing a few and wounding other students.
Consumers: Individuals and groups who obtain, use, maintain and dispose of goods (products),
and services to fulfill needs and satisfaction.
Goods: tangible objects (example: a car)
Services: intangible actions of work done (example: a catering service)
Satisfaction: Also known as utility. It involves your overall well-being and how you could be
better off.
The Road to Consumer Economics
Adam Smith (1776): Author of An Inquiry Into the Nature and Causes of the Wealth of
Nations. Stated that consumers act in their own self interest and markets work with an
invisible hand.
o Founder of modern economics
o Felt consumers are king; they should be given the freedom and authority to run
their own economic affairs.
o The U.S.s founding fathers liked the idea that wealth should be based on goods
and services produced (not just gold) and consumed by consumers.
Capitalism: a social system based on the recognition on individual rights.
State is separated from economics, just like it is separated from church and religion.
Being able to freely choose among a vast array of commodities gives people a sense of
freedom.
The U.S. is considered a capitalistic economy. However, it is not true capitalism because
there is some government regulation. For example, all consumers are required to have
car insurance.
Consumerism: The belief that goods give meaning to individuals and their roles in society.
T/F: Buying goods and services is an act of trust.
Answer: TRUE. There are many risks involved in purchases. We assume our purchases
will increase our satisfaction, so we must be able to trust the supplier. However,
consumption may not always bring satisfaction. There are unsatisfactory products,
consumer fraud, and injurious consumption (a product that will be negative in the long
run).
Caveat emptor: May the buyer beware.
Ford Example: had trouble with Firestone tires back in 2000, and a lot of models had to
be recalled.
Tuesday, August 23
Needs: The barest minimum physical necessities that allow you to survive. For example, food,
water, shelter. (The last one is debatable and depends on the situation. Hawaii has a large
homeless community probably because it is not as bad to be homeless on the beach as in other
places.)
INSERT IMAGE: MASLOWS HEIRARCHY OF NEEDS
Wants: What people would acquire if their resources were unlimited.
Resources: Things used to produce other things to satisfy peoples needs and wants.
Provide the means to satisfy the family systems demands.
Material resources are nonhuman resources. Examples: money, water
Human resources are personal characteristics. Examples: intelligence, personality,
previous experiences
Scarcity: Not enough resources are available to satisfy ones needs and wants so choices have to
be made about their use.
The Consumption Process
Awareness what are needs and wants
o A stimulus lets us know that something is needed or desired. For example, a
broken computer lets us know another one is needed or your friend purchases a
new Play Station which makes you aware that you also want one.
Thinking gather information
o The mental exploration of the possibilities, weighing the pros and cons and
gathering information about the product in question.
o Random set of thoughts. Example: Price? Size? Brand?
Planning shopping around
o Deciding ordered steps of action needed to make the purchase a reality.
Implementing buying
o Actually taking the steps needed to buy the good.
Evaluating would you re-purchase?
o Spend time reflecting on your outcome.
KNOW THIS LIST!
Factors that Influence Consumers
Economics: The condition of national and worldwide economies during times of
decision making can make a difference.
o Unemployment rate.
o Interest rates.
o Inflation rates.
History: The background history of each person influences his or her decisions.
o This includes our own personal histories and also the histories of our families.
o It also includes the history of the area in which the person resides.
Consumer Culture: Refers to patterns of human activity and the symbolic structures that
give such activity significance. The way people live in accordance to beliefs, language,
history, or the way they dress.
o Includes groups in which an individual or family resides and their behaviors and
traditions.
Individual Traits: For example, age, eye color, hair color/type, weight, height
Physiological needs: For example, thirst, hunger, safety, housing, protection
Desire for Technology: Technology includes the methods and materials that individuals
use to get what they want.
o For example, machines, techniques, material objects, and processes
Political area
o For example, government standards and regulations affect what you can and
cannot buy.
KNOW THIS LIST!
The Business Cycle: refers to the periodic fluctuations of economic activity such as recessions,
booms, and other ups and downs.
INSERT DIAGRAM: BUSINESS CYCLE
Expansion: Prosperity, growth, high output, low unemployment, increased retail sales and
housing.
Unemployment: Temporary moderate decline or downturn in economy, declining output,
income, employment, and trade that usually lasts six months to a year. This includes people who
do not have a job, have been looking in the last four weeks, and are available for work.
A deep recession is called a depression.
Some industries do well even in bad economies such as gun sales, alcohol sales, and
prostitution.
Looked at the Bureau of Labor Statistics.
There was a huge spike in unemployment in January of 2008.
Now the Government says were at 9.1% unemployment. However, since this does not
account for those who have been looking for work for more than four weeks it may not
be very accurate.