Spending Flashcards - Comparison Shopping

Questions and Answers

Which activity is done in Step 2 of comparison shopping?

Assess the purchase objectively.

Why do prices increase when demand for a product is high?

Companies know that people will be willing to spend more to get an in-demand product.

Which statements apply to leasing a car? (Select all that apply)

You must return the car after the lease ends. (correct)

You can keep the car after the lease ends.

There are mileage restrictions on the car. (correct)

There are penalties for ending the lease early. (correct)

Which strategy best helps a famous brand company reach consumers?

Advertising nationally Signup and view all the answers

A monthly fixed-rate mortgage payment never changes.

True Signup and view all the answers

For which product(s) would it be most beneficial to wait before buying?

Smartphone Signup and view all the answers

Why is building equity in a home a good thing?

Equity in a home increases the homeowner's net worth. Signup and view all the answers

Which of the following illustrates the most economically sound choice for Brad?

Buying both a car and a home Signup and view all the answers

Why might people choose to rent a home rather than buy a home?

They may be relocated for a job. Signup and view all the answers

At what point does buying in bulk stop being a wise spending choice?

When the consumer buys more than is needed. Signup and view all the answers

Study Notes

Comparison Shopping

Step 2 involves assessing the purchase objectively to make informed decisions.

Price Dynamics

Prices rise when demand is high because companies capitalize on consumers’ willingness to pay more for in-demand products.

Leasing a Car

Important considerations for car leasing include:
- The requirement to return the car at the end of the lease.
- Potential penalties for early termination of the lease.
- Mileage restrictions imposed on the leased vehicle.

Advertising Strategies

National advertising is crucial for famous brand companies to effectively reach a broad consumer base.

Mortgage Payments

Fixed-rate mortgage payments remain constant throughout the loan term, providing financial predictability.

Purchase Timing

For optimal savings, it is advisable to wait before purchasing a smartphone due to its fluctuating pricing history.

Building Equity

Building equity in a home enhances the homeowner’s net worth, making it a financially beneficial endeavor.

Economic Choices

For an individual like Brad, who has stable employment and plans to stay long-term, the most economically sound decision is to buy both a car and a home to build equity and credit.

Renting vs. Buying

Individuals might opt to rent a home instead of buying if they face job relocation, which makes homeownership less practical.

Bulk Purchasing

Buying in bulk becomes unwise when consumers purchase more than they actually need, leading to potential waste or unnecessary spending.

Description

Test your knowledge with these spending flashcards that cover key concepts in comparison shopping and consumer behavior. From understanding price increases due to demand to the specifics of leasing a car, this quiz will enhance your financial literacy.