FCS 103 5th EditionExam # 1 Study Guide Lectures: 1 - 4Lecture 1 (January 15)Economic Foundation for Consumer Decisions 1. What is the definition of a consumer?A. Purchase, or are given, use, maintain, dispose of products, goods and services to achieve highest satisfaction possible within income limits.2. What are the 2 general consuming categories that we group expenditures into?A. A good or service3. What are examples of types of scarcity?A. Condition where insufficient products or services to meet all people’s wants/needs4. What do even rich people have scarcity with?A. Time5. What is the difference between a “good” and a “service?”A. Services are intangible acts that satisfy human wants such as college classes, healthcare, and transportation while goods are tangible objects that satisfy human wants such as apartments and food.6. Be able to recognize examples of scarcity – government versus universal versus foreign.A. Universal–Decisions made to invest in resources—buying parts to build an item B. Government-- Roads built, (or upgraded), schools, fire and policeC. Foreign Lands--Use of oil resources, cropping decisions 7. What is an opportunity cost? Be able to associate what OC relate to – example: college education – could spend 4 years working or raising a family instead full time….A. Value of your second best choice given up for your first choiceB. Make a choice purchase one good or service and sacrifice the resources for another….C. Examples house, cars, savings accounts, vacation, children, marriage, clothing D. Exists because of scarcity8. What OC do we give up when we make our first choice (ans. - second choice)?A. Giving up your second choice (usually the more fun option)9. Supply demand examples – as the ___ goes up, the _____ goes down – for each.A. Law of Demand: As price increases, quantity purchased drops. As prices falls, quantity purchased increases.B. Law of Supply: As the price rises, the quantity produced will increase. As the price falls, the quantity produced will decrease. C. Supply: Quantity of a product that businesses are willing to sell at each possible price. D. Demand: Quantity of a good or service purchased at each possible price.10. When quantity demanded equals quantity supplied, the price is usually at its _________.A. Equilibrium price11. Relative price – how does that compare to money price (& understand what synonyms go with “money” price)?A. Price of a commodity in relation to another. Start With:i) Original Price of Product A / Original price of Product B. Compared to: Current Price of Product A / Current Price of Product B. Money Price - Price we see today using today’s dollarsi) Price paid at a specific point in time. Also called absolute price, nominal price, current price. **Be careful using money prices to compare price increases!12. What is perfect competition – be able to choose which product from a list is the “most” perfect?A. Markets where many businesses offer same product for sale to many customers at the same price.13. See Question 12 and consider “imperfect” competition with the same question.A. Businesses have power to set price and quantity of products14. What form of government is based on free market, and supply and demand pricing?A. Capitalism15. What is a monopoly – which of a list (provided) would be the most (or least) like a monopoly?A. Monopoly - Created when only one producer of a product with no substitutesi) Amtrak, iPhone16. What is the definition of consumer sovereignty?A. Where consumers decide which products and styles survive in market place. Producers do not dictate consumer tastes17. What types of services does US have in place that are more like a socialistic system?A. Public schools, public libraries, public pools, etc.18. What are the laws that protect business ideas for a period of years?A. Patent Laws stimulate business ideas and protects product development costs: Limited life or time span19. From what government entity did the Internet originate? A. World Wide Web began from a US Department of Defense project in 1960’sLecture 2 (January 22) 20. Which source of values do most of our consumer decisions come from?A. Family values, upbringing, ethnic and cultural background, religious belief, research21. What are some items that can add to the money price to be a part the true “transaction cost” of an item?A. Time, hassle, annoyance, scheduling conflict, shipping conflict, etc.22. About how much does each class (lecture) time cost you as a full-time student here? A. $93.4923. What are the 5 steps to the decision making process? And what is the usual order?A. Deciding to act—Ex: Need transportation to work-how?B. Identifying alternatives---cab, walk, bike, car, train, otherC. Evaluating alternatives---pro’s and con’s of eachD. Committing to a decision—deciding to buy a used carE. Evaluating the results—was that the best option?24. When we buy something at the spur of the moment without pre-planning what do we call that?A. Impulse buy25. What is it called when we always buy the same product or the same size container, etc? Why do we do that?A. Habit buying (ex: laundry detergent); We may have been raised that way or we are comfortable with that purchase and the outcome of it’s use. 26. What is conspicuous consumption? A. Making a purchase more to impress others than for inherent values to the purchase.27. What is technical obsolescence? Be able to recognize examples..( tv changes a few years ago, computer is now slow, cell phone doesn’t access web, etc…A. When products lose value because they are “out of date” rather than being worn out28. What part of your life was Parkinson’s Law addressing?A. Time management; “Work expands to fit the time allotted for it”29. What type of goal may be referred to as a “bucket list” item?A. Life-span goalsi) Long term goal: Have a family and take a vacation every yearii) Short-term goal: go sky diving, meet a celebrity, etc.30. What type of buying is triggered by items next to checkout lanesA. Impulse buying31. What is the single most important mistake that leads to bad choices, especially with contracts or purchase agreements? A. Failure to read the fine printLecture 3 (January 29)32. About how much per person is spent in the US by advertising? Who ultimately pays for that?A. Estimated that companies spend $ 541 /person/yr. WE pay