Topic 5 - Consumer Economics Flashcards
Founder of Modern Economics
- Author of the Wealth of Nations
- Advocated for laissez-faire policies
- created concepts of GDP
Adam Smith
The belief that satisfaction of consumers’ needs and wants is the ultimate economic goal and that the economy is fundamentally ruled by consumer desires
CONSUMER SOVEREIGNTY
is the study of how people deal with scarcity, fulfill needs, and select among alternative goods, services, and actions.
* It provides an understanding of how the marketplace works, what our role is in it, and how our choices affect our lifestyles.
Consumer Economics
CONSUMER vs. CUSTOMER
Consumers use goods and services
(A baby is a consumer….they use diapers, cream, clothing, foods.)
Customers buy goods and services
(A mother is a customer…she buys diapers, cream, clothing, foods.)
We are all consumers and customers at different parts of our lives.
Three Economic Roles
Worker
Consumer
Citizen
A role that:
* Earn money to help stimulate the economy
* Produce goods and services for consumers
* Pay income taxes to government, they use to fund different programs
Worker
A role that:
* Use goods and services
* Provide purpose for business production
Consumer
A role that:
* A legal resident of a country
* Right to vote
* Must pay taxes
* Use public services
Citizen
Factors on how the economy works
- Individuals/Society
- Government
- Businesses
IGB
An economic system in which the
production of goods and services are
directed by the laws of supply and
demand.
Market Economy
is a system where private individuals and businesses drive the economy on the basis of demand and supply without state intervention.
Market Economy
driven by the principle that businesses will sell their products at the highest price that consumers are willing to pay, while the consumers attempt to purchase those products at the lowest cost.
Market Economy
Involves the flow of goods and
services from business firms to
consumers, the composition of the
flow, and the evaluation or pricing of
the component parts of the flow. It is
concerned, too, with the flow of
productive resources (or their
services) from resource owners to
business firms, with their evaluation,
and with their allocation among
alternative uses (Leftwich, 1970)
Price Theory
Determinants of Demand
- Price of the Good
- Taste and preferences of the consumer
- Price of related goods
- Income of the consumer
- Other factors like distribution
of income, population growth etc
Consumers act to divide their limited resources among products and services that could meet their satisfaction.
People consume based on their existing resources.
Consumer Demand
Theory
What is the core feature of consumerism
Redefinition of needs and
aspirations
An economic and social system that encourages the consumption of goods and services as a means of attaining wellbeing.
Consumerism
refers to a state in which consumers demand products and services that have undergone an eco-friendly production process or one that involves recycling and safeguarding the planet’s resources. In other words, this entails the production, promotion, and advancement of the utilization or use of goods and services based on their pro-environment benefits.
Green Consumerism
is an economic model designed to minimize resource input, as well as waste and emission production. This aims to reach the maximum efficiency in the use of finite resources, the gradual transition to renewable resources, and recovery of the materials and products at the end of their useful life. Moreover, it targets to rebuild all available types of capital, including financial, human, social, and natural. Essentially, this describes a regenerative economic system.
Circular Economy
An economic model that highlight business
opportunities where cycles rather than linear processes, dominate. The process is restorative and regenerative by design. It aims to keep products, components, and materials at their highest utility and value at all times.
Circular Economy
Principles of Circular Economy
The concept is based on three (3) main principles:
1 Minimization of waste and pollution
The concept suggests the minimization of waste and pollution by reducing damages from economic activities.
2 Extension of the useful life of products and materials
A circular economy aims to extend the useful life of the products and materials by creating the loops of the materials and products circulating in the economy. The goal is achieved through the active reuse, repair, and remanufacturing of the products and materials utilized in the economy.
3 Regeneration of natural systems
The regeneration of natural systems is one of the fundamental concepts of a (circular) economy. It enhances natural capital and creates the necessary conditions for the regeneration of natural systems.
Minimization
Extension
Regeneration
