FCS 226 Chapter 1 Consumer in a Free Society

FCS 226 Chapter 1 Consumer in a Free Society - The Consumer...

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Unformatted text preview: The Consumer in a Free The Consumer in a Free Society Our Economy Our Economy ~308 Million Consumers Households ­ one or more persons occupying a housing unit Savings – Money not spent Our Economy (cont’d) . . . Our Economy (cont’d) . . . Gross National Product (GNP) – total value of goods and services produced by an economy in a given year Gross Domestic Product (GDP) – total value of goods and services produced for consumers within U.S. borders Personal Income – total of wages, rent, interest, dividends, transfer payments, & unincorporated net income Disposable Personal Income – amount of income left after deducting personal taxes from personal income Discretionary income – that portion of disposable income remaining after paying basic necessities Debt in the U.S. economy Approximately 11 trillion dollars All segments of society in debt Business Farming Government Consumers and Producers Consumers and Producers A Relationship How has the role of the consumer changed over the past decades? How has the role of the producer changed over the past decades? Who decides what will be Who decides what will be produced? Consumers? Producers? How do seasons affect this? Parts of the country? Why do new products disappear? Why are new products continually entering the market? Consumer Sovereignty Consumer Sovereignty “the consumer as ruler” The consumer’s need is the only important function of an economy Meeting the needs of the consumer is the principal function of the economy All consumer decisions are valid, even if demands are detrimental to themselves or society Consumer Sovereignty (cont’d) Consumer Sovereignty (cont’d) Consumer welfare is promoted Freedom to choose is exercised – accept or reject what the market offers at the prices sellers ask Competition facilitates good quality and value Consumers and the Lifecycle Consumers and the Lifecycle Describe the varying needs of consumers throughout the lifecycle, from infancy to old age What other factors vary among consumers? Collective Consumption Collective Consumption Schools Libraries Museums Parks Highways/roads Military expenditures 911 impact Quality of Products and Quality of Products and Services How do consumers determine quality of a product or service? Are consumers good at this? What information is gathered? How? How do we as consumers know a product is safe? How do we check for quantity? Assumption: Pricing Pricing Is this true? When prices increase, so does quality When prices decrease, so does quality A situation in which few sellers control the majority of the supply of a product or service Oligopoly Oligopoly Prices are usually higher than prices in a competitive market Automobiles Appliances Tires Chewing gum Cereals Light bulbs Matches Soap Cigarettes Digital cameras DVD players Televisions Soda Monopoly Monopoly A situation in which one seller controls the supply of a product or service Rare The Antitrust Division of the U.S. Department of Justice is obligated to protect consumers from monopoly power ...
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