"Consumer Economics" Chapter Three - Vocab and Notes

Consumers: Leading and Following

What contributed to the shift from hunter-gatherer societies to self-sufficient economic units?

Industrialization

Cottage Industries

Manufacturing operated out of the home

Standard of Living (Material Measure)

The quality or quantity of goods and services aspired to by individuals or societies

Values

Individual or collective beliefs or ideas about what is desirable

Level of Living

The actual quality and quantity of goods and services experienced by individuals and society

Consumption Patterns

The extent to which goods and services are used up

Economic Adult

A rational and informed consumer, regardless of age

Economic Minor

An irrational and uninformed consumer, regardless of age

Where do children in the U.S. get most of their education about responsible consumption?

Their families

Where do adults learn to consume?

Sellers of goods and services use advertising and salesmanship to guide consumers; learning through experiences with aggressive sellers or advertisements

Ignorant-Consumer Standard (Consumer Sovereignty/Economic Minor)

A standard based on the assumption that the law should protect even consumers who are ignorant, careless, and wasteful. E.g., false advertisement is illegal

Reasonable-Consumer Standard (Producer Sovereignty/Economic Adult)

A standard based on the assumption that the government should protect consumers but also that that consumers have the responsibility to be informed and rational. E.g., it is the consumer’s responsibility to read the fine print before signing

What is the guiding force for producers?

The desire for profit; profit-and-loss statements

Criticisms of the profit system

• Restriction of production/supply until a profit goal is achieved

• Manipulating consumers to buy products that will potentially harm them or provide no benefit

• Sellers/retailers are less accountable to consumer well-being and avoid consequences for fraudulent activities

• Artificial list pricing (inflates price then marks product down to the original price for the impression of a “sale”)

Goods that are produced or made available in anticipation of demand

• Food

• Tobacco products

• Alcohol

• Soft drinks

• Houses

• Transportation

• Gasoline

• Insurance services