5 Consumption Flashcards
use of goods and services by consumers to address needs and wants
consumption
completely free
free goods
goods that you must pay for
economic goods
immediate use; readily satisfy wants and needs
final goods
used to produce final products
intermediate goods
using final goods and services to directly address particular want/need
direct
use goods and services to produce final good
indirect
natural tendency to satisfy needs to live
law of economic order
people are happier when imitating others
law of imitation
increased satisfaction if we use variety of products, rather than just one
law of variety
people buy products that complement each other for more satisfaction
law of harmony
as you consume more and more of a product, we are less satisfied as we reach our saturation point
law of diminishing marginal utility
anticipated value; implies increased value at a later date
exchange value
during emergency situation; how important it is NOW, rather than later
use value
must entertain opportunity cost
value/utility
measure of happiness and satisfaction one receives from consuming goods and services; benefit received from consumption
utility
overall benefit
total utility
additional utility gained from using additional unit of goods and srrvices
marginal utility
greatest value; objective is to raise total value of a product, with minimum amount of money
utility maximization
actions should be judged whether or not they are right/wrong to extend that they increase or decrease utility
utilitarianism
people must weigh the cost and benefits of a decision, and take the decision with the most utility
rational choice theory
marginal utility decreases as more of the good/service is consumed, and people reach their saturation point
law of decreasing marginal utility
businesses use this, getting average saturation point and pricing over that
utility and the cost of unlimited
“most disposable income, more consumption rate” - John Maynard Keynes
income as a consumption factor
permanent income increases consumption more than a temporary one - “Milton Friedman”
permanent income hypothesis
more wealth, more consumption rate
wealth as a consumption factor
less wealth, less consumption rate
wealth as a consumption factor
higher interest rate discourages people from borrowing money; lower rate encourages consumption
interest rate as a consumption factor
lower interest rate discourages people from borrowing money; higher rate encourages consumption
interest rate as a consumption factor
you buy things for the particular season (winter, wet, christmas, summer, etc)
season as a consumption factor
convinces you to start and continue using a product
advertising as a consumption factor
all products/services must be safe
consumers’ right to safety
educated to be a good consumer
consumers’ right to consumer education
compensated when something bad happens to you/given faulty product
consumers’ right to redress
government must ensure that basic needs are affordable and accessible
consumers’ right to basic needs
choose products and services to avail, unless it’s illegal; gov’t encourages competition for variety
consumers’ right to choose
represented by diff gov’t agencies
consumers’ right to representation
important information displayed on product/good
consumers’ right to information
products encourage healthy environment
consumers’ right to healthy environment
read all available info; practice your due diligence
critical awareness
take action; sue, return a faulty product, etc
alertness and action
help other consumers by being honest with reviews; give them warning if the product is faulty or low quality
solidarity
know what effects goods and products have on the environment
social and environmental concern
supports actions that support happiness, denounces those that cause sadness
utilitarianism
