Basic economic concepts like supply, demand, costs of production, and competition impact product prices and consumer spending. Purchase decisions are informed by weighing marginal costs versus benefits using decision models. Conspicuous consumption aimed at impressing others can lead to financial problems if it causes spending beyond one's means. Advertising and marketing influence consumer demand and decision-making in the global marketplace.

1. EPF10a. Examine basic economic concepts and their
relation to product prices and consumer spending
EPF10c. Describe the steps in making a purchase decision
EPF10d. Determine the consequences of conspicuous
consumption
EPF10h. Examine the impact of advertising & marketing
on consumer demand and decision-making in the global
marketplace

2. Basic economic concepts can be used to understand pricing of
products.
Basic economic concepts can be used to understand consumer
spending.

3. What economic concepts impact
consumers?
 Profit is an incentive for producers.
 Businesses produce what consumers demand, a
concept known as consumer sovereignty.
 If the cost of production goes up, supply will decrease
and prices will rise; if the cost of production goes
down, supply will increase and prices will fall.
 An increase in productivity lowers the cost of
production and thus increases supply, leading to a
decrease in price.
 Competition among businesses affects consumer
prices.

4. What economic concepts can be used
to understand consumer spending?
 Changes in income affect the demand for goods and
services; an increase in income increases demand for
most products, and vice versa.
 Interest income is an incentive to save money.
 Supply and demand for a product or service determine
price.

5. Purchase decisions are made more easily when marginal benefit
and marginal cost are considered.
The use of decision models can improve purchase decision-
making.

6. What are marginal costs and marginal
benefits?
Marginal benefits are the additional benefits of
consuming one more of something.
Marginal costs are the additional costs (i.e., what one
must give up) of getting one more.
For example, the marginal benefit of buying one more
pair of jeans might be the time saved by having to
wash jeans less frequently. The marginal cost of one
more pair of jeans might be giving up buying a new
shirt or pair of shoes.

7. How does one weigh marginal costs
and benefits when making a
decision?
Sample Decision Model (PACED)
 Step 1: Determine the problem.
 Step 2: List the alternatives.
 Step 3: Establish criteria.
 Step 4: Evaluate each alternative according to the criteria.
 Step 5: Decide.

8. How can a decision model improve decision-making?
What other steps could improve purchasing
decisions?
 researching prices for commonly purchased items
 using comparison shopping
 weighing the pros and cons of sales
incentives, guarantees, warranties, and rebates
 understanding sales terminology
 planning purchases and avoiding impulse buying
 computing unit prices
 reading labels
 reading contracts
 computing total costs
 checking references of businesses
 patronizing reputable businesses.

9. Conspicuous consumption can lead to financial troubles.

10. What is conspicuous consumption
and how can it lead to financial
problems?
 Conspicuous consumption refers to buying goods and
services not for their intrinsic value but for the
purpose of impressing others in hopes of improving
one’s social status.
 Conspicuous consumption can lead to spending
beyond one’s means. This requires borrowing, and
excessive borrowing can lead to credit problems.

11. Advertising and marketing affect consumer demand and
decision-making.

12. How do advertising and marketing
affect consumer demand and
decision-making?
Advertising features may have features that may be
misleading (e.g., infomercials, celebrity
endorsements).