Consumer Basics
Define a consumer.
A consumer is a person who buys and uses goods or services.
Define consumer protection
Consumer protection means laws and rules that protect buyers from unsafe, faulty or unfair products and services.
State one responsibility of a consumer
Possible answers:
research your product BEFORE buying
use products properly/read instructions
Two sectors in the 2-sector model
Households and businesses/firms
Define a market
A market is any place or system where buyers and sellers exchange goods and services.
Define a business
A business is an organisation that produces and sells goods or services, usually to earn a profit.
State what a consumer guarantee is
A consumer guarantee is an automatic legal promise under Australian Consumer Law that a product or service will meet basic standards.
One legal responsibility of a business
Possible answers:
follow consumer law
provide safe products
avoid misleading advertising
honour consumer rights
What the four factors of production/resources that households provide to firms?
Resources such as labour, land, capital and enterprise.
Define allocation of resources
Allocation of resources means deciding how scarce resources are used to produce goods and services.
Two rights of Australian consumers
Possible answers:
right to safe products
right to products that work as described
right to repairs, replacement or refund in some situations
right to truthful information
Describe a warranty - list both types of warranties and outline what they are.
A warranty is an extra promise from a business or manufacturer about a product, often for a certain time period.
One social responsibility of consumers or businesses
Possible answers:
consumers disposing of waste responsibly
businesses treating workers fairly
businesses reducing environmental harm
acting ethically in the community
How households and businesses interact
Households provide resources to businesses and receive income. Businesses use those resources to produce goods and services, which households then buy.
This is know as the 2 sector circular flow of income.
Explain the economic problem
The economic problem is that resources are limited but wants are unlimited, so choices must be made.
Why consumer rights are important
They help protect people from unsafe products, false claims and unfair treatment. They also make markets fairer and increase trust between buyers and sellers.
Describe how Australian Consumer Law protects consumers
It protects consumers by requiring products to be safe, match descriptions, be of acceptable quality, and giving rights to repair, replacement or refund when needed.
Compare and contrast legal vs social responsibility
Legal responsibility = required by law
Social responsibility = expected by society, even if not always required by law
- factor markets involve households supplying resources to firms in exchange for income like wages and rent
- product markets involve firms supplying households with goods & services in exchange for consumer spending/consumer expenditure
One feature of each system
Market economy: decisions mainly made by consumers and businesses
Mixed market economy: both government and private businesses make decisions
Planned economy: government makes most production decisions
List 3 ways you should respond to a faulty product as a consumer
A strong answer should include:
stop using the faulty product if unsafe
keep receipt/proof of purchase if possible
contact the business
ask for repair, replacement or refund depending on the problem
know rights under consumer law
Compare and contrast the following - Warranty vs consumer guarantee vs product safety recall
Warranty = extra promise offered by seller/manufacturer
Consumer guarantee = automatic legal protection under the law
Product safety recall = when a product is removed or returned because it is unsafe
Explain how rights and responsibilities are protected by law and which organisation is key to this.
Consumer rights and responsibilities in Australia are protected by law through the Australian Consumer Law (ACL), a uniform national framework that operates across all state and territory jurisdictions. This law is contained in Schedule 2 of the Competition and Consumer Act 2010.
The key organisation responsible for enforcing this law at the national level is the Australian Competition and Consumer Commission (ACCC).
Explain two things that may happen if households stop buying as many goods and services
Possible points:
businesses lose income
production may decrease
workers may lose hours/jobs
less profit for businesses
slower economic activity
Examples also needed to secure full points.
How each system answers the three economic questions
Market economy: businesses and consumers decide through prices and demand
Mixed economy: markets decide many things, but government also steps in
Planned economy: government decides what, how and for whom to produce