Wednesday

• Fun Fact Wednesday!!!!!• BB, Christina & Kaley… test tomorrow• Bring headphones tomorrow – substitute• Notes today on the beginning of chapter 3

Take it Seriously!!!!End of marking period is creeping up 11/9 & that marks our ½ way point– you’re old enough to be taking on responsibilities

& need to recognize the freedoms in this class… don’t take advantage!!!

• Auction – Monday was not so great…• You signed off on requirements – get a binder this

weekend!!!• You will be tracking your daily spending & income habits

for this entire chapter – we’ll talk more about that Friday/ decorate our record books

Chapter 3Practical Economics: Your Role as a Consumer

Consumption, Income & Decision Making• Buyers & sellers interact in markets• Market prices are set by buyers’ levels of

supply & demand• This chapter = how to budge, spend wisely &

save a serious amount of dough$$$

Are you a SAVER or a SPENDER???

• Neither is necessarily better than the other• Wise buying decisions NOW will

help you meet your long-term financial goals LATER

Consumer: any person/ group that buys or uses goods/ services to satisfy personal needs & wants

• Your ability to spend (or consume) depends on available income & how much of it you choose to save or spend

• Disposable Income: money remaining for a person to spend or save after all taxes/ debts have been paid– 1. Necessities: food, clothing, housing– 2. Discretionary income: money a person has left after

necessities have been bought to spend on extras or save

Your earning power (ability to consume/ make an income) depends on 5 factors

• Education• Job• Experience• Health• Environment

**what are examples of each that could result in you belonging to a lower, middle or upper class?**

Think about a recent purchase you made & what the reasons were for buying it – get specific!

• How many times do you ACTUALLY THINK about the reasons for the purchase you are about to make?

• Do you concentrate on NEED FIRST & WANT SECOND???

• Do you consider TRADE-OFFS involved? (who remembers what a trade-off is???)

All consumer decisions involve 3 main considerations:

1. Scarce Resources2. Opportunity Cost2. Rational Choice

Scarce Resources

• Time & money are our scarce resources – remember: scarcity always exists… even if you’re loaded, you don’t

have all the time in the world, if you have a ton of free time, you most likely are not rolling in $$

• You need to invest TIME in learning about a product you wish to buy– price comparison, pictures, consumer ratings,

feedback from friends/ family, old or new• You obviously need to invest MONEY in

ultimately buying the product

Opportunity Cost

• Remember: your opportunity cost is the value of your “plan B” -- it is the value of the next best thing you would have done/ chosen

• In buying an item, you should think about the quality of the item you are potentially buying– What does “value versus volume” mean?

General Consumer Spending

High-quality products cost more than lower-quality products

Nike flats on sale at Sports Authority versus Nike Hyperdunk – let’s say the Hypers are $80 more than the others

http://www.youtube.com/watch?v=aihnaXAZ8VA

• If you choose the higher priced shoe, you sacrifice $80• The opportunity cost of the Hypers over the flats is whatever

else you would have bought with that $80• Remember: NEED then WANT!!!

– Do you need the Hypers or do you want them?– Will it improve your performance or is it just totally awesome?

Rational Choice: choosing the best-quality alternative/ item that is the least expensive from

among comparable-quality products (finding a middle ground…great item + manageable price)

• Each person’s value system for his/ her needs & wants is different

• Analyzing these 3 aspects of consumer decisions will give you the greatest possible chance of obtaining the things you NEED then WANT

For Homework

• Due Friday• Print out the following – each image should be

about the size of ¼ a sheet of computer paper– ONE item you deeply desire/ want to save up to

buy--- give this some SERIOUS thought, it will be a point of focus for the next few weeks

– ONE item/ type of item(s) that is your weakness. This should be a temptation that you want, don’t need & are looking to cut out to save $$

Spare Time?..... • Start listing major purchases you’ve made

since the beginning of the summer until now…

• This will be the first entry in your activity piece for Friday

Your Role as a Consumer(circle one)

SPENDER or SAVER__________________: any person/ group that buys or uses goods/ services to satisfy personal needs & wants- Your ability to spend (or consume) depends on available income & how much of it you choose to save or spend______________Income: money remaining for a person to spend or save after all taxes/ debts have been paid

1. ___________________: food, clothing, housing2. _______________________________: money a person has left after necessities have been bought to spend on extras or save Your earning power depends on 5 factors

Education_________Experience_________

Environment

Think about a recent purchase you made & what the reasons were for buying it - How many times do you ACTUALLY THINK about the reasons for the purchase you are about to make?- Do you concentrate on ___________________& _____________________???- Do you consider TRADE-OFFS involved?

All consumer decisions involve 3 main considerations:1. _________________________2. _________________________3. _________________________

Scarce Resources- __________& ____________are our scarce resources - You need to invest TIME in learning about a product you wish to buy

*_______________________________, pictures, consumer ratings, feedback from friends/ family, old or new

- You obviously need to invest MONEY in ultimately buying the product

Opportunity Cost- Remember: your opportunity cost is the value of your “plan B” -- it is the value of the next best thing you would have done/ chosen- In buying an item, you should think about the ____________________of the item you are potentially buying

*What does “_____________________________________” mean?

Rational Choice: choosing the _____________________________/ item that is the least expensive from among comparable-quality products (finding a middle ground…_____________________+ ________________________)- Each person’s value system for his/ her needs & wants is different- Analyzing these 3 aspects of consumer decisions will give you the greatest possible chance of obtaining the things you ______________then _______________