Bell Ringer #1 - Chapter 3Create a list of disposable/need expenses and another for discretionary/want expenses using the items listed below.

• Electric Bill• Anniversary

Present• Make – up• Gas for your car• Tickets to Football

Game

• New Jeans• Lunch at Runza• Rent Payment• Groceries• Lunch Money for

Child

AnswersDisposable Discretionary

• Electric Bill• Gas for your car• Rent Payment• Lunch Money for

Child• Groceries

• New Jeans• Lunch at Runza• Anniversary Present• Make – up• Tickets to Football

Game

Chapter 3Your Role as a Consumer

Consumption, Income, and Decision Making

Video

Vocab:

•Consumer: any person or group that buys or uses goods and services to satisfy personal needs and wants.

•The ability to consume depends on available income and how much of it a person chooses to spend now or save.

INCOMEDISPOSABLE DISCRETIONARY

• Income remaining for a person to spend or save after all taxes have been paid.

• Spend on:▫ Food▫ Clothing▫ Shelter▫ Bills associated with

shelter▫ ie. necessities

• Money income a person has left to spend on extras after necessities have been bought.

• Examples:▫ Luxury items▫ Entertainment▫ “Non-necessities”▫ Or – put into savings

VS 1Consumer decision making deals with consumers’ choices about how to spend their income.

What are four things that can make a difference in a person’s earning power?

1. Education2. Occupation3. Experience4. Health

Decision Making as a Consumer Involve three main considerations:

1.Scarce resources▫ Income & time▫ Research the product – the time and

money you spend on the product ultimately cannot be used for anything else.

2. Opportunity Cost – see page 68 (figure

3.2)▫ If you pick a high quality product over

a medium or low-quality, you will pay more money.

▫ What features are important to you? ▫ Is it a need or want? ▫ Is it worth paying the extra money?

Chart in Motion

3. Rational Choice

—choosing the alternative that has the greatest perceived value from among comparable-quality products.

•Each person’s value system is different.

Monday 2/9

•Bell Ringer #3:▫Break down YOUR budget▫Income =▫What expenses do you have & how much?

•Today:▫Consumer Spending – staple to your notes▫Budgeting Activity▫Homework: Article & questions

Figure 2

Activity—Rational Choice

•Choose a product you like and create two advertisements. The first ad should emphasize why buying this product is a rational choice. The second ad should appeal to the fun or light side of the product and the desire to buy it, even if it’s not a rational purchase.

Example-Coke (thirst—rational & drink b/c everyone else does–more fun)

Three Basic Buying Principles

1.Gathering information2.Using advertising wisely3.Comparison shopping

Gathering Information

•Shopping tips:oYou should obtain only as much information

as is worthwhile.

oAsk salespeople for accurate information.

oUse a standard search engine on the Internet, and visit various sites in order to compare different information.

oRead reviews other people have written about different brands and models of the product

Before making purchases, especially of big-ticket items, consumers should gather information and compare products from different sources.

Using Advertising Wisely

•competitive advertising: advertising that attempts to persuade consumers that a product is different from and superior to any other

informative advertising:

•advertising that benefits consumers by providing useful information about a product

•Look at page 72-73

Be Aware of Deceptive Advertising•Bait and Switch-- ad that attracts consumers with a low-priced product, then tries to sell them a higher-priced product

FYI

Studies reveal that Americans are bombarded with 3,000 to 5,000 advertising messages a day. The assault is so overwhelming that people scarcely notice most of these messages.

Comparison Shopping•getting information on the types and prices of products available from different stores and companies

•Warranty-the promise of a manufacturer to repair or replace a product within a certain period of time if it is faulty

Comparison shopping continued…

Brand name Generic

•Word, picture, or logo on a product that helps consumers distinguish it from similar products.

•General name for a product rather than a specific brand name given by the manufacturer.

Decision Making Process – 5 Steps

1. Identify the Problem2. List the Alternatives3. Determine the Pros and Cons4. Make the best Decision5. Evaluate the Decision

With A Neighbor

•Share with a neighbor the big decision you wrote about in your notes.

•Tell them what your alternatives were•Tell them which decision you made•Tell them how it turned out – would you

make the same decision again? What would you do differently?

Decision Making Con’t

•People often make a chart or list to help them make decisions.

•Let’s practice using the chart on the back of your note sheet using the 5 steps.▫Identify the problem – Need to choose a

college▫List the alternatives – UNL, UNK, SCC,

Kansas State, Harvard

Decision Making practice con’t

•Determine Pros and Cons▫List criteria –Tuition cost is $85 per credit

hour or less, Must have 2000 students or less, Must have dorms and cafeteria plans, Must be within a 2 hour drive of Lincoln, Have a marching band program, Have an abroad program for the Junior and Senior year

▫Check Alternatives and Criteria for pros and cons

UNL

•$85 per credit hour•Has 8,000 students•Has dorm/cafeterias for students•Less than a 2 hour drive•Has a top marching band program•No abroad studies programs

UNK

•$85 per credit hour•Has 1700 students•Less than a 2 hour drive from Lincoln•Has dorm/cafeteria programs•Has a marching band program•Has an abroad studies program

SCC

•$60 per credit hour•Has 1000 students•Less than a 2 hour drive from Lincoln•No dorm program has a cafeteria•No marching band program•No study abroad program

Kansas State College

•$125 per credit hour (out of state rate)•Has dorm/cafeteria plans•More than a 2 hour drive•Has 2,000 students•Has marching program•Has an abroad study program

Harvard

•$275 per credit hour•Has 3,500 students•Much more than a 2 hour drive•Has a dorm/food program•Has a marching band •Has a study abroad program

Decision Making Practice con’t

•Make the best Decision.▫?

•Evaluate the Decision▫Best college experience ever!