Consumer Economics Test 1
Terms in this set (58)
Initially it appears that negative framing if a choice has more impact that positive framing, but a warning or negative message can act as a boomerang by making the risky behavior more attractive.
Demanding a higher price to sell an item than people who don't have the mug would be willing to pay for it.
The earliest buyers of new brands, services, products, or other market offerings--like new technologies and ideas as well.
Consumer Price Index
Measures prices each month of a fixed list of 400 goods and services bought by a typical consumer.
Measures how confident consumers are in the economy. Determines the attitudes about consumption and changes and trends therein.
Pursues new business opportunities relentlessly withut becoming deterred by the limited resources they initially controlled.
Father of Modern Economics
Awareness, thinking, planning, implementing, evaluating
5 steps in the consumption process
What is to be produced? How are these goods produced? For Whom?
3 questions economies must solve
US Population today
Food and drug
substances most likely to be regulated
The founder of the consumer movement, was a pure food reformer. He encouraged food packaging of food to keep it clean
Wrote the Jungle--exposed wrong doings in the meat packing industry.
Federal Trade Commission Act
Passed to enforce antitrust laws and to spell out unfair methods of competition, including deceptive advertising. (Teddy Roosevelt)
Stock market crashed in 1929 and its lowest point was in 1933.
President Franklin D Roosevelt
Served three terms. 1930s. Food, drug, Cosmetics act of 1938.
1960s. Consumer Bill of Rights.
Consumer Bill of Rights
The right to safety. The right to be heard. The right to choose. The right to information. The right to decent environment. The right to consumer education. The right to reasonable redress for physical damages suffered from a product.
1980s. Consumer education and more consumer protection legislation was passed during this time.
North American Free Trade Agreement
Signed by Clinton. Greatly impacted trade, employment, and prices of the time (1993 - 2001)
George W. Bush
2000s. Antitrust legislation was less enforced. Deregulation spread. Large companies benefited from mergers. A weakend economy made smaller companies more vulnerable and willing.
Theory of Reasoned Action
Behavorial intentions are based on a combination of the attitude toward a specific behavior, the social or normative beliefs about the appropriateness of the behavior, and the motivation to comply with the normative beliefs
An economic theory that explains choice under uncertainty and led to the idea of loss aversion. This idea holds that people feel more pain from loss than pleasure from profit.
Advertising that conveys a certain message to indicate/convince someone how you will feel when you buy something. Marketing and advertising that says that you will be happy if you buy said product will make you happy and sad if you don't.
Theory of Mental Accounting
Framing or putting into context an individuals buying and selling. People who obsess over saving $5 on groceries will happily blow $1,000 on a vacation because they account for the money differently.
5 Steps of the Scientific Method
Observation, hypothesis, experiment, analyze, repeat
5 Areas of Consumer Well Being
Economics or financial well being. Physical well being. Social well being.Psychological/emotional well being. Environmental, political, spiritual well being.
5 reasons Entrepreneurs Succeed
Have deep knowledge and personal experience of their product or service. They learned quickly from their mistakes and made rapid adjustments. They created meaningful brands that distinguished their offerings and responded to consumers changing priorities. They initiated a process of reciprocal learning with their customers that resulted from ongoing two way communication with them. They created a range of organizational capabilities that delivered on the promises of their respective brands.
Women as Entrepeneurs
In 1973 women owned just 4.6 percent of the U.S. businesses--but, by 2000 the percentage rose to nearly 50 percent. From 1987 to 2000 the number of women owned business doubled from 4.5 million to 9.1 million.
The study or science of production, distribution, and consumption
Expenses incurred or attached when one alternative is selected over other choices
Cease and Desist Order
An administrative/judicial order forcing businesses to cease "unfair or deceptive practices"
Products such as computers and video camers lose value because they so rapidly become technologically out of date
The study of how people deal with scarcity, fulfill needs, and select among alternative goods, services, and actions.
Individuals or groups (families) who obtain, use, and dispose of products and services to increase life satisfaction and fulfill needs.
Tangible objects that are purchased (a car)
Intangible actions--work that can be done to satisfy/provide for others
When individuals/groups make sonsumption decisions that will have negative consequences, affecting their quality of life in the long run.
A condition in which there is an insufficient amount or supply. Often exists because we have unlimited wants but limited resources to pursue those wants.
The possibility or perception of harm, suffering, danger or loss
Exchanges are controlled by market place demands and supply rather than by outside forces
decisions about what how and for whom to produce are made by those who control the government
Exists when there is only one producer and no substitute exists
Refers to the premise that consumers decide which goods will survive and that roducers cannot dictate consumer tastes
(Market economy) an economic system characterized by open competition in free market.
An economic system where the government (or the state) centrally plans, owns, and controls most of the capital and makes decisions about prices and quantities
A social/economic system in which nearly all capital is collectively owned. (North Korea/Cuba)
The general term for exchange transactions that take place on the internet
Emerchendise - selling goods and services electronically through distribution channels
Efinance - banking, debit cards, smart cars, banking machines... etc
Rational Self Interest
People make choices that wil give them the greatest amount of satisfaction at a particular time based on information they have at their disposal
occurs when someone pays an extremely high price for a product for its prestige value
prevents business monopolies and are aimed at establishing and maintaining competition so consumers get fair and adequate goods and prices
based on custom and is the unwritten system of law that is the foundation for both the English and US legal systems
Drastic long lasting decline in the economy, with high unemployment, falling prices , and decreasing business activity.
The ability to reason
A strong desire for ideas, things, and information
Occurs when a brand branches off from the original prodruct adding a related product to the line (ie oldspice after shave producing body wash.)
Diminishing Marginal Utility
A consumer will receive less satisfaction from each successive unit consumed. (The second piece of cake is always less satisfying than the first)
(Neuroeconomics) Introducing psychologically realistic models of economic agents into economic theory. A subset focusing on personal choices (versus those of firms and institutions) and the mental changes that can effect choice selection.
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