What is consumption simple words?
Consumption means using, buying or eating something. If we don’t reduce our energy consumption, we will run out of fuel. Conspicuous consumption is buying something to show off. Consumption is related to the verb consume, which means to eat, use, or buy.
What is basic consumption process?
Consumption represents the process by which goods, services, or ideas are used and transformed into value. The basic consumer behavior process includes steps that begin with consumer needs and finish with value.
What are the three stages in the consumption process?
The model is shown in Figure 10.3 and is divided into three stages. Pre-consumption, Consumption and Post- consumption.
What are the stages of the consumption process?
The 5 stages which a consumer often goes through when they are considering a purchase: problem or need recognition, information search, evaluation of alternatives, purchase, and post-purchase behavior.
What are the three important buying principles?
In this section, you’ll learn about three basic buying princi- ples that can help you and all consumers achieve this goal. They are: (1) gathering information; (2) using advertising wisely; and (3) comparison shopping.
What are 3 decisions consumers have to make?
Three decisions consumers have to make: To buy the item, if you need the item, if you’ll use trade offs. How do economists define rational choice? The alternative that has the greatest perceived value.
What two scarce resources are involved in buying decisions?
decided to make a purchase, at least two scarce resources are involved—income and time. Before you spend your money income, you need to invest time in obtain- ing information about the product you wish to buy.
What is the difference between disposable income and discretionary income?
Disposable income represents the amount of money you have for spending and saving after you pay your income taxes. Discretionary income is the money that an individual or a family has to invest, save, or spend after taxes and necessities are paid. Discretionary income comes from your disposable income.
How does scarcity affect our decision making?
The ability to make decisions comes with a limited capacity. The scarcity state depletes this finite capacity of decision-making. The scarcity of money affects the decision to spend that money on the urgent needs while ignoring the other important things which comes with a burden of future cost.
Why does scarcity lead to tradeoffs?
Your scarce resources force you to make a choice and a trade-off producing one product or another. Tradeoffs: Since resources are scarce for a drink manufacturer, it must make a tradeoff between producing bottles of water and bottles of soda. Like producers, consumers also have to make choices.
What is an opportunity cost example?
When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.
Why is opportunity cost the best forgone alternative?
Opportunity cost is, simply, the cost of losing something (best alternative) to get something. It is the ‘best alternative’ foregone because that is the highest price (in non-monetary terms) being paid for it.
When one is making a choice the cost of what one gives up is called?
Opportunity cost is what you give up (the benefits of the next best alternative) when you make a choice.
What is forgone alternative?
Opportunity cost is the value of the next best alternative forgone as a result of making a decision. If, from an individual perspective, studying economics and sleeping are the two best alternatives for spending a given hour of time, then the cost of each can be expressed as the value of the other.