Chapter 3 Review
1. Disposable income-Money income left after taxes have been paid.
2. Warranty-Written guarantee of a product for a certain period of time.
3. Bait and switch-Deceptive advertising intended to defraud the consumer.
4. Comparison shopping-Getting information about similar types of products and
prices
5. Competitive advertising-Attempts to persuade consumers that certain products are
different and superior to others.
6. Consumer
7. Discretionary income
8. Informative advertising
9. Brand name
10. Generic brand
11. Ethical behavior
1. Discretionary income is what is left after people have bought the necessities.
2. The two scarce resources you use when you are a consumer are time and money.
3. Before buying anything you should ask yourself the following three questions: do I
really need this item, do I want a high, medium, low quality item and how much time do
I want to spend on repairs and maintenance.
4. All rational consumers think differently because each has a different feeling of value
and how they should spend their scarce income.
5. The three important buying principles are gathering information, using advertising
wisely and comparison shopping.
6. The two major types of commercial advertising are competitive advertising and
informative advertising.
7. Before making a purchase you should obtain only enough information as is
worthwhile.
8. Comparison shopping always you to be a rational consumer.
9. The major purposes of consumerism today are to educate buyers about the purchases
they make and to demand better and safer products from manufacturers.
10. The three types of help federal agencies give to consumers are as follows: provide
information on products, provide information on selling practices and help to settle
disagreements.
11. The four consumer rights JFK stated are as follows: The right to safety, the right to
be informed, the right to choose and the right to be heard.
12. Two consumer responsibilities are learning as much as possible about a product and
the following of ethical behavior.
Determining cause and effect-
A person's earning power is almost entirely based on their education, occupation and
health. A person's education determines what occupations are at first open to him or her.
A person's health similarly effects what occupations are open for him or her. Once you
have an occupation this solely effects your income because it is usually where all income
comes from.
Analyzing Information-
Some people buy brand name products because they feel that the money trade-off is not
too big as to counterbalance the quality trade-off. When a person buys a brand name
product they are paying extra for the advertising spent on making that product brand
name. They feel that the brand name product is of higher quality than the generic
product and that this difference is worth the money trade-off.
Making Comparisons-
Consumers have both rights and responsibilities when buying and using a product. They
have the right to a safe product, information about a product, to choose from many
different but similar products and the right to be heard when laws are being written that
will effect them. However they must use the information they are given to decide
whether a product is good enough or not, they must research the different choices they
are given and they must talk to be heard when they feel that something is wrong. They
must also make ethical decisions so as not to cheat a company.