101 Economics - Consumer Theory Easily Explained

| * A need to have a certain product * Consumers will search until that product is found * Need products that stand out from others * Customers have problems making decision so the company will have to try to make that decision easier for them

The aim of this essay is to explore who the winners and losers are in a consumer society by looking at how status is affected by choices as a consequence of economic position. The essay also examines how major stakeholders, such as supermarkets and suppliers, impact that judgement and the global environmental consequences.

Through the arrival of American consumerism as early as the 1600s through interactions between Native Americans and Europeans America has always grown to be a trade nation. In modern consumerism consumers tend to purchase never wondering the ethical matter of their products. Since Europeans arrived on American soil and the transactions that lead to different cultural assimilation between the Europeans and Native Americans through clothing, jewelry, and weapons. As time progress the colonist boycott British products due to the high taxes that were placed imports from Britain. In each case different cases show American consumerism affected different groups of people from assimilation to British culture through the Native Americans to the free

One of Milton Friedman's first great contributions in the economics world was his Theory of the Consumption Function in 1957. “This theory championed the idea that a person's consumption and savings decisions are more greatly impacted by permanent changes to income rather than changes to income that are perceived as ephemeral” (Who was Milton Friedman, Investopedia). Instead, Friedman presented that people’s annual consumption is a function of their permanent income, a term he announced as a measure of the average income people expect over a few years.

This article gave a lot of alarming statistics about America’s consumerism and waste deposit. One of the most surprising statistics to me, was that America uses 1/3 of the worlds paper, while containing only 5% of the world’s population. I think I found this one of the most surprising statistics because I feel as though I don’t use a lot of paper myself. One statistic that I didn’t find surprising, but still found upsetting, was that only 7% of America’s population use public transportation as a daily option. Maybe I found this upsetting because I know I am completely guilty of being in the 93% that don’t use public transport daily. I drive myself where I need to go, even though I am aware of the consequences towards the environment. Overall,

In this paper, I will compare as well as contrast classical theory to neoclassical theory.

One worldview our society accepts is consumerism. Consumerism is the idea of spending money and time on things which interest our minds. Each person consumes different objects whether it be video games, accessories, clothes, or even pets. Consumerism is not just buying things that we want, it can also be activities that we spend time on. For example, schools can consume our time to get good grades on tests and projects. Sports can also consume our time on practices and competitions to grow in our abilities and skills in that particular sport. Purchasing material goods and the time we spend looking at things or a physical activity is the consumerism in most American societies.

Two economic models of thought are classical and Keynesian models. Each model takes a diverse approach to the economic education of financial policy, buyer behavior, and government spending. The classical model, which traces its origins to the 1770s, was the first systematic attempt to explain the determinants of the price level and the national levels of real GDP, employment, consumption, savings, and investments. Classical economist Adam Smith and others assumed that all wages and prices were flexible and that competitive markets existed throughout the economy. Classical economic theory is fixed in the theory of an (no government) unrestrictive economic market. This model especially its focus toward macroeconomics relies on four major assumptions: pure competition exists, wages and prices are flexible, people are motivated by self-interest, and people cannot be fooled by money illusion.

In order to analyze this form of economics, we first must understand that this form was created during a period when corporations began to occur, resulting in heavy inequalities to occur within society (Sherman & Hunt, pp. 131). This was a period when socialism was especially called upon due to the inequalities that were occurring within Europe and the United States. Neoclassical economics then became a form as a result of this tension. This can be said due to the focus that this economic form had a large number of small producers, rather than a large number of corporations (Sherman & Hunt, pp. 132). In addition to this, consumers and producers neither have power to influence the market significantly, indicating that supply and demand is affected by neither party in significant way. In this theory, consumers consume smartly, having a perceived value of a good or service within a society; which due to this, prices of goods often fall below and above input value (Investopedia, 2017). With that being said, to whom the social surplus accrues depends on if the price of a good or service rises or goes below the input cost. So, if the value of a good or service goes below input value, then then social surplus accrues the consumers; but, if the price of a good or service goes above the input value the social surplus accrues the producer. Due to neither party having the capability to influence the market, to whom the social surplus

The neoclassical school of thought is said to be an evolution of the classical school of economic thought, which was originally proposed by Adam Smith in the 18th century. Price theory and the perfect competition model remain central to both schools of thought, however neoclassicism incorporates the additional ideas of utility, or perceived value, and marginalism, or the extra use gained from each incremental increase. As neoclassical economics is essentially determined by the utility on a consumer scale, it has come to be known as the study of microeconomics. (Neoclassical Economics)

Consumerism is seen as caustic in the eyes of many. The common trend seen among copious economists is that consumerism is evil and is corrupting the people partaking. The claim that consumerism is causing a global wide drop in happiness is ludicrous. In Rockwell’s essay “In Defense of Consumerism” he claims without consumerism there is no production, and without production there are no jobs, which ultimately leads to poverty and unhappiness. Over a couple centuries life expectancy has increased by almost 30 years due to advances of medicine and the availability of modern conveniences (Rockwell 640). This is all due to the increase consumption of superfluous items. Consumerism benefits society by stimulating the economy, providing necessities, and increasing life expectancy.

Monetarist mainstream economics is a doctrine that absorbed and refined few scientific-looking contributions that were convenient to it. So, it is not necessarily due to its occasional social merits, if any, that neoclassical and monetarist principles were developed and marketed to be the introductory manual of monetarist mainstream economics; mainly, they are convenient to the mainstream monetarist economic policy. “neoclassical political economy is largely an ideology in the service of the powerful” (Nitzan and Bichler, 2009, p.

This essay will be explaining how different aspects of Economics affect the consumer and how helpful it is for people to understand them. Different economic ideas and concepts will be explained in detail and will include examples displaying how it applies to the average consumer. The vocabulary being explained will be terms that will indefinitely affect every consumer and will show how important it is for society to be familiar with economics.

There is so much to talk about in this essay, so I will personally get straight into this paper starting with the mystery hidden worldviews that we all do not really take a look at that much.From the beginning they shed light on the fact that all people are consumers at one level. We were made by God to consume, to eat, to enjoy, to live. Healthy consumption should take one’s responsibility to others into account. This is not the case when consumption becomes an “-ism.” They state: “Consumerism absolutism consumption by believe that we can find fulfillment by accumulating wealth and everything that comes with it” This tendency is true in all facets of American culture. We desire “just a little bit more” of anything that we think will

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