Consumer Economics Chapter 1 Terms

Consumer Economics Overview

• Consumer economics studies how individuals manage scarcity, fulfill needs, and make choices among alternatives.
• Consumers are people or groups (like families) who obtain, use, and dispose of goods to enhance life satisfaction.

Key Concepts

• Cabinet Castaways: Forgotten products in cabinets illustrate inefficiency in consumer habits.
• Consumerism: The belief that goods provide meaning and identity within society.
• Adam Smith: Known as the father of modern economics; authored "The Wealth of Nations," arguing for the consumer's role in coordinating economies.

Psychological Aspects

• Faith: Consumption is seen as an act of faith in the value or utility of goods.
• Injurious Consumption: Decisions that adversely affect long-term quality of life stem from poor consumption choices.

Economic Principles

• Caveat Emptor: A principle meaning "let the buyer beware," highlighting consumer responsibility in purchasing.
• Demography: The study of populations, including size, growth, and distribution statistics.
• Demographics: Data that describes populations or sub-groups.

Needs and Wants

• Maslow's Hierarchy of Needs: Levels include physiological, safety, belonging, esteem, and self-actualization.
• Needs: Essential requirements for survival (e.g., food).
• Wants: Desired items beyond necessities (e.g., luxury cars).

Consumer Decision-Making Process

• 5-Step Consumer Process: Involves awareness, thinking, planning, acting, and evaluating.
• Thinking: Involves exploring possibilities and weighing pros and cons.
• Planning: Involves strategizing steps needed to achieve goals.
• Implementing/Acting: Execution of plans, involving actions like product sampling or purchasing.
• Evaluating: Reflecting on consumer satisfaction post-purchase.

Consumer Style Influences

• Consumer Style: Refers to behavioral patterns in financial decision-making.
• 7 Factors Influencing Consumer Style: Include economics, history, culture, personality, environment, technology, and politics.

Economic Indicators

• Economics: The study of production, distribution, and consumption of goods.
• Real GDP: Measures the value of newly produced goods/services in a country, adjusted for inflation.
• Inflation: Represents a consistent increase in prices over time.
• Deflation: Characterized by a decrease in prices.
• Business Cycle: Illustrates economic expansions and contractions across three stages: expansion, recession, and recovery.

Stages of the Business Cycle

• Expansion: Marked by prosperity, growth, low unemployment, and high retail sales.
• Recession: A decline in economic activity and retail performance.
• Recovery: A phase where economic activity begins to rise after a recession.

Explore key terms from Chapter 1 of Consumer Economics to deepen your understanding of how individuals manage scarcity and fulfill their needs. These flashcards cover essential concepts like consumer behavior and product usage. Test yourself and enhance your knowledge!