1. © 2010 South-Western, Cengage Learning SLIDE 1 Chapter 11 Lesson 11.1 Making Better Decisions Learning Objectives LO 1-1 Apply the decision-making process to solve consumer problems. LO 1-2 Explain economic wants and needs that influence consumer decision making. © 2016 South-Western, Cengage Learning

2. © 2010 South-Western, Cengage Learning SLIDE 2 Chapter 11 The Decision-Making Process Step 1: Define the problem or goal Step 2: Obtain accurate information Step 3: Compare choices Step 4: Make a decision Step 5: Take action Step 6: Reevaluate your choice © 2016 South-Western, Cengage Learning

3. © 2010 South-Western, Cengage Learning SLIDE 3 Chapter 11 Step 1: Define the Problem The first step is to define the problem or a goal you wish to achieve. Once it is identified, look for ways to resolve it that fit your financial resources now and in the future. If you can’t define the problem or goal, then perhaps making the purchase would not be a good decision. © 2016 South-Western, Cengage Learning

4. © 2010 South-Western, Cengage Learning SLIDE 4 Chapter 11 Step 2: Obtain Accurate Information List all alternative solutions and the cost of each. Do not consider sunk costs. A sunk cost is an expense that occurred in the past, for which money was spent that cannot be recovered. © 2016 South-Western, Cengage Learning

5. © 2010 South-Western, Cengage Learning SLIDE 5 Chapter 11 Step 3: Compare Choices Many choices involve getting something in return for giving up something else (trade-off). The trade-off results in an opportunity cost, which is the value of what you are giving up. © 2016 South-Western, Cengage Learning

6. © 2010 South-Western, Cengage Learning SLIDE 6 Chapter 11 Step 4: Make a Decision Your decision should be based on careful consideration of the problem and thorough collection and analysis of data. The wise decision in any situation is the one that best meets your needs, is within your budget, and gives you the most value for your dollar investment. © 2016 South-Western, Cengage Learning

7. © 2010 South-Western, Cengage Learning SLIDE 7 Chapter 11 Step 5: Take Action Take action to implement your chosen solution. Because you have made a thorough analysis of choices for solving your problem, you can be sure that you have made the best decision you could with the available information. © 2016 South-Western, Cengage Learning

8. © 2010 South-Western, Cengage Learning SLIDE 8 Chapter 11 Step 6: Reevaluate Your Choice After several months have passed, revisit your decision and evaluate whether you have solved the problem or met the need. Are you happy with the choice you made? If not, what could you do differently next time to make a better decision? Should you do something different now? If your needs have changed or your initial decision isn’t working out, go through the decision-making process again to decide whether to make a change. © 2016 South-Western, Cengage Learning

9. © 2010 South-Western, Cengage Learning SLIDE 9 Chapter 11 Economic Wants and Needs Basic needs are the items necessary for maintaining physical life. Examples? Life-enhancing wants are items beyond basic needs that add to your quality of life. Examples? © 2016 South-Western, Cengage Learning

10. © 2010 South-Western, Cengage Learning SLIDE 10 Chapter 11 Individual Wants Values Personal preferences Personal preferences or tastes are your likes and dislikes. Income Leisure time © 2016 South-Western, Cengage Learning

11. © 2010 South-Western, Cengage Learning SLIDE 11 Chapter 11 Collective Values Collective values are ideals that are important to society as a whole. Society influences our values, goals, and choices because it demands social responsibility from its citizens. © 2016 South-Western, Cengage Learning

12. © 2010 South-Western, Cengage Learning SLIDE 12 Chapter 11 Collective Values Legal protection Employment Progress Innovations are new ideas, products, or services that bring about changes in the way we live. Quality of environment Public goods Public goods are the goods and services provided by government to its citizens. (continued) © 2016 South-Western, Cengage Learning