1. Economics Chapter 3: Your Role as a Consumer
ALL Sections:

2. Spending Money Disposable vs. Discretionary Income
Disposable= money income after all taxes have been paid
Discretionary= money left after all necessities have been bought. Money spent on entertainment and luxury items.
Rational Chooice: alternative choice that has the best value
Values is subjective
In your notes: What do you look for when purchasing a pair of shoes?

3. Decision Making as a Consumer
First must decide if you are going to buy an item.
Next at least 2 scarce resources are involved:
Time
Money
Opportunity Cost: the value of your highest alternative choice that you did not make.

4. Three Basic Buying Principles
Gathering Information
The value of your own time is important in this
Using Advertising wisely
Competitive Ads: Attempts to prove superiority
Usually from established companies
Informative Ads: give you information on the product
Comparative: compare directly two products
Bait and Switch Ads: deceptive
Bait you with a low price, show you the better model on arrival
Comparison Shopping: Gaining info on Brands
Generic Names vs. Brand Names

10. Consumerism Movement to educate people about the products they buy.
Demand better and safer products from manufacturers
Consumer Rights: Gained Steam with the Kennedy Administration in the 1960’s.
- Consumer Bill of Rights
1. Right to safety
2. Right to be informed
3. Right to Choose
4. Right to be heard
5. Right to Redress

11. Consumer Responsibilities
Consumer Responsibilities: Educate yourself
If Producers have regulation, Consumers must act Ethically:
Acting morally when it comes to taking part in the market

12. Consumer Fraud and Scams
Avoiding Scams
A. “If it is too good to be true, it probably is!”
B. “There is nothing free in life!”
C. Read all contracts
D. Get everything in writing
E. Never send money to win a prize
F. Contact the Attorney Generals Office (Consumer Protections Agency)

13. Types of Scams Bait and Switch
- Drawn to the store because of ad, then salesman sells you a more expensive product.
- this is against the law
Work at Home Scheme
- you send money to assemble products then company pays to back when you finish the job
Paying to Win
- You have one a product or trip, but requests you send money or give credit card number, to cover shipping and handling.

14. Types of Fraud Home Solicitation Sales - hard sell the elderly
- salesmen must be licensed
Negative Option Clubs
- club sends you books or CD’s and credits your account if you don’t send them back on time.
Charitable Solicitations
- phony charities
Nigerian Scam