Finance Ch 8

Why is it important to consider opportunity costs and trade-offs when deciding on a large purchase?

need to know what you are giving up to obtain that purchase, trade-offs involve a lot of time.

What are the best sources of information to research products you consider buying?

publications written by editors who review content and do not accept payments for promoting a specific product.

advantage of specialty retailer

most knowledgeable, can help you find a product best suited to your needs

drawback of specialty retailer

Prices may be higher than similar products at a big box store or online

advantage of Big Box Stores

wide variety of goods in a single store, often at discounted prices.

drawback of Big Box Stores

highest quality and exclusive brands are typically not sold there.

advantage of outlet stores

You can always find a specific product from a brand at a discounted price.

drawback of outlet stores

They may not stock the latest merchandise

advantage of online

You can make purchases from the comfort of your own home, saving time and travel costs

drawback of online

Packaging and shipping a product may make online purchasing more expensive than buying in-person.

For the purchase identified in question 3, which option appears to be most promising? Explain your reasoning.

specialty retailers because although their prices may be higher, they offer the best quality of products that can last for many years and make the price worth it.

What are some additional precautions to take before purchasing a product online?

Confirm retailer is authorized to sell the product in the United States before buying. Do not assume that a logo certifying the site as Better Business Bureau® rated or verified secure is legitimate. Stick to large, recognized sellers and websites. Purchase with a credit card to provide you with more protection against fraud.

Describe how store policies may differ when returning an item.

Some stores may allow you to return opened and use products, while other stores may require the product to be returned unopened. Other stores charge a restocking fee to return a product, especially a special-order item. you may be charged shipping to return an online purchase. All sales are considered final and you cannot return it if a store is out of business.

Identify a good or service you or your family plan to purchase in the coming month. Which of the tips described in Section 3 might you be able to use to save money? Explain

Timing purchases, because there are times of the years in which products can be cheaper. To buy electronics, the best time of year is during the Black Friday and Cyber Monday holiday sales.

implied warranty.

Implied warranty is unwritten guarantee that a product will work for its advertised purpose and meet reasonable performance expectations.

express warranty

Express warranty is usually a written warranty and is either full or limited.

What does a manufacturer’s warranty cover?

manufacturing defects

What doesn't a manufacturer’s warranty cover?

excessive wear and tear or damage due to accidents or misuse.

Why should the length and type of warranty be considered when purchasing an expensive good or service?

it can be a good indicator of product or service quality.

How is a service contract different than a warranty?

A service contract may not provide specific information on what is covered or how claims are handled, while warranties do.

What is the main reason a retailer wants to sell you a service contract?

They make a significant profit on service contracts.

Who should you go to first when trying to resolve a complaint about a purchased good or service?

It is best to start where you bought it.

How can the Better Business Bureau help you deal with a consumer complaint?

They have a form on their website where you can file a complaint against a company, which has no cost. They send your complaint to the company which has two weeks to respond.

Tamara purchases a baby crib and notices it has a flaw that makes it susceptible to collapse. She no longer has a receipt, and neither the retailer nor the manufacturer is willing to help. What federal agency should she contact with a complaint? Explain

Consumer Product Safety Commission (CPSC) because it protects consumers from unreasonable risks of injury or death from using various products.

How would one start the process to file a complaint with their state consumer protection bureau?

The consumer would have to pursue legal action through a small claims court.

What is small claims court?

State courts where disputes can be resolved without high fees or costs.

Benefits of small claims court

it usually costs less than $100 to file in small claims court, and you will get the money back if you win.

Drawback of small claims court

if the dispute cannot be settled there, you may want to hire a lawyer which is usually expensive and may require an upfront payment with no guarantee of winning.