Choice | Consumer | Economic Goods | Free Goods | Goods | Limited Means | Opportunity Cost | Scarcity | Service | The basic economic problem | The real cost of a decision | Values conflict and compromises | Values influence decisions made | Values people hold | Wants | Why can individuals not have everything they want
In making a decision, a consumer must consider their values (which could include consideration of others and the importance of keeping fit and healthy). Fully explain how values influence the economic decision a consumer may make. In your answer: (i) define what is meant by a consumer and values (ii) describe why consumers may hold different values (iii) explain how values held by consumers will influence decisions they make.
A consumer is a person (individual) who buys / uses goods and/or services. Values are core beliefs or key principles that individuals consider most important, e.g., consideration of others, the importance of keeping fit and healthy. The values that an individual holds are determined by their age, peer pressure, media, upbringing, personal experiences, religion and culture. An individual that holds the value of keeping fit and healthy is likely to be influenced in their decision making by this and therefore could purchase a gym membership and clothing items to be used exercising as a consequence of holding this value.
Explain the concept of choice.
A choice is a decision between alternatives, e.g., to go out for a meal or see a movie at a cinema or rent a video. Individuals have limited means (income, skill, time), so can not afford to buy everything they want or have sufficient time to do everything, so they must make choices.
For each situation outlined, identify the value that the person holds. (i) Brooke, who puts money into a bank account. (ii) Nicole spends part of each day either going to the gym or swimming at the local pool. (iii) Ray decides to join an Irish dancing group. (iv) Parents, Dave and Sally, want their sons to go to university or learn a trade.
(i) Financial security/belief that it is important to save money for her retirement, emergency or pay back a loan. (ii) Being healthy/being active. (iii) Culture/meeting others. (iv) Importance of getting an education or qualification.
What is the economic term that describes the next best alternative foregone when a decision is made?
Warren uses his time to attend university, watch movies, go fishing, play sport, and exercise at the local gym or pool. His parents have told him that his university work must come first and to concentrate on this rather than doing other things. Explain several compromises that Warren could make to resolve this conflict.
There is a conflict between Warren’s activities (fishing, sport and exercising) and his university studies because his time is limited, time spent on one activity cannot be used for another activity. Possible compromises might include: Warren could spend less time exercising or watching movies so that he can study. Warren could exercise or fish early in the morning before university starts. OR Warren could exercise and watch movies in the weekend when university is not on.
Man-made goods use in the production of other goods and services are termed:
Capital goods. Capital (producer) goods are man-made goods used in the production of other goods and services, for example, tools, machinery.
What is the term given for core beliefs or key principles or those things we consider most important?