WEEK 5: CONSUMER ECONOMICS Flashcards
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.
Consumer Economics
Use goods and services
Consumers
Buy goods and services
Customers
T or F: we are all consumers and customers at different part of our lives
TRUE
Economic Roles
- Worker
- Consumer
- Citizen
Economic Roles: WORKER
- Earn money to help stimulate the economy.
- Produce goods and services for consumers.
- Pay income taxes to government, they use to fund different programs.
Economic Roles: CONSUMER
- Use goods and services.
- Provide purpose for business production.
Economic Roles: CITIZEN
- A legal resident of a country
- Right to vote
- Must pay taxes
- Use public services
How the Economy Works
- Individuals/Society
- Government
- Business
provide labor, skills,
capital
Individuals/Society
Provides public services and payments.
Government
Pays employees’ wages
Business
An economic system in which the production of goods and services
are directed by the laws of supply and demand.
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.
Price Theory
Consumers act to divide their limited resources among products and services that could meet their satisfaction.
Consumer Demand Theory
Determinant of Demand
- Price of the Good
- Income of the consumer
- Price of related goods
- Taste and preferences of the consumer.
- Other factors like distribution of income, population growth, etc.
Degree of pleasure or
satisfaction
Utility
Limitations of the CDT
- It assumes that people are rational
(always?) - It assumes that all benefits from consumption can be identified, compared, and added up in reality,
so complicated if faced with too many options.
The Paradox of Choice: Why more is less?
“choice no longer liberates, but debilitates. It might even be said to
tyrannies”
Redefinition of needs and aspirations
Feature of Consumerism
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.
Green Consumerism
Linear Economy
Take – Make – Dispose
Circular Economy
Make – Use – Recycle
An economic model that highlights business opportunities where
cycles rather than linear processes, dominate.
Circular Economy
is about decoupling economic growth from the use of finite resources.
Circular economy (Circular Economy and
a New Model of Growth)
An economic model designed to minimize resource input, as well as
waste and emission production.
Circular Economy
Principles of Circular Economy
- Minimization of waste and pollution
- Extension of the useful life of products and materials
- Regeneration of natural systems
Management of finite resources
Technological Cycles
Management of Renewable Resources
Biological Cycles
