1.3 Minor and Major Financial Desicions

Question 1

Factors affecting consumer or financial decisions

Answer 1

• The purpose of the product / service - a need or a want?​
• The opportunity cost - what opportunities are we losing if we make the purchase?​
• The short-term or long-term effects on you - if you are financing the item, you may be paying off this loan over a long period of time.

Question 2

what are minor decisions

Answer 2

Minor decisions are low stakes, often involving routine purchases or low-cost items. They require minimal thought and are frequently driven by habit or immediate need. Characteristics include:

Question 3

what are major decisions

Answer 3

Major: These decisions involve significant time, effort, and financial commitment. They often have a longer decision-making process and require careful consideration due to the potential consequences or high costs.

Question 4

What is low financial cost

Answer 4

Low Financial Cost: Examples include groceries, everyday toiletries, or snacks. Short-Term Impact: The decision has minimal impact and is often easily reversible. Low Involvement: Little to no research or planning is involved; the decision is usually quick. Low Risk: There’s minimal risk if the decision doesn’t fully satisfy the buyer, as the stakes are low.

Question 5

what is a high financial cost

Answer 5

High Financial Cost: Examples include buying a car, house, or major appliances. Long-Term Impact: The product or service has a lasting impact on the buyer’s life. High Involvement: The buyer conducts extensive research and compares options, often involving others in the decision-making.

Risk of Regret or Loss: The buyer may feel a high risk of regret if the purchase doesn’t meet expectations.