MTH6

docx

School

Eastern Gateway Community College *

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Course

102

Subject

Economics

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by anaelibaldor

Many factors play into how a consumer goes about making purchasing decisions. I believe income and prices tend to be the main driving factors, but all of the above mentioned factors play a role, especially in certain instances over others. Employment tends to go hand-in-hand with income, usually. Those who are employed and who have a higher income than others, however, are able to make more expensive purchasing decisions than those whose income is lower. This can range from things as common as groceries, to large purchases like homes or vehicles. When someone is making more money, they have more disposable income and are also able to save and invest more than their counterparts who are simply living paycheck-to-paycheck. This means that they are simply able to save for these large purchases, while those who do not have the means are more likely to finance, or even avoid those purchases altogether. Additionally, those whose income is lower may be only purchasing certain goods/services when the prices are low enough to fit their budget. This can mean they are avoiding certain items or brands in their entirety, or only buying them through specific vendors or other means (example: only buying clothes secondhand, as opposed to new) to lock in the lowest prices possible. Those with higher incomes may try to save money when they can, but they are certainly able to make those choices for themselves instead of having to stick to a tighter budget, and they are also able to use more disposable income on more impulse and other discretionary goods/services. Interest rates are another factor which can influence some major purchasing decisions, such as buying a home or vehicle in particular. Home interest rates are astoundingly high, currently, and this may deter people who would otherwise consider purchasing a home from "pulling the trigger," as they do not want to pay potentially thousands more than their counterparts who purchased homes a few years ago. Of course, they could try to refinance down the line (this is something that my husband and I were lucky enough to do right before the interest rates skyrocketed, and we miraculously locked in a lower rate), but this can come with fees and the possible extension of the loan period. Ultimately, all of these factors play into consumer confidence. When we feel prices increasing, income fluctuating, interest rates climbing, etc, we are all much more wary and careful with our money. Tumultuous times can create a lot of anxiety and uncertainty with our finances, and make it much more difficult to make decisions, big or small.

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