Consumer Expenditure - Assignment Example

The most affected continent is Europe. For instance in Spain and Greece consumers have turned into investing instead of expenditure. The harsh economic conditions have made it unpredictable to spend a lot of money. This has made selling and manufacturing companies go bankrupt. In an argument by Blythe the economic conditions witnessed in Europe may be witnessed in other nations if the consumer population is not advised to spend more (56). However, the consumer population argues that the limited resources they have does not allow them to spend most of it in buying secondary goods.

This scenario has forced the selling and manufacturing companies reconsider how to lure more consumers to purchase their products. This paper will focus on how consumers make decisions concerning the expenditure. Additionally, it will give an insight on how the rational consumer budgets their limited resources. It will also focus on how the selling and manufacturing companies strategize to increase the number of sales of their products. The decision making process on expenditure among the consumers depend on several factors.

One of the most significant factors is the income levels of the consumer. It is an obvious assumption to say that low income earners are the least spenders. With an increase of employees in this bracket the cutting cost on expenditure will continue to rise. Low income earners shift their focus first on necessary needs like paying rent providing food to their families and investing in education. Considering these priorities, it is evident that the money spend to purchase the other products is very limited.

According to an argument by Barro saving also denies the consumers a significant amount of money to spend on other goods (106). It is the same scenario with high income earners. This bracket focuses more on investing and securing their financial future. With the global economy under numerous uncertainties, saving provides the most logical way to secure ones financial future. Apart from the income statements of consumers, the price of households goods determining the decision making on expenditure.

Noel argues that a perspective on the market 2 years back from now, it is estimated that the price of general commodities has risen by an average of 50% (93). The basic needs like food and clothing have also been affected. This in turn means that, the consumer population will tend to cut cost on other products in order to have enough resources to acquire the basic goods they need. The uncertain financial and economic future has also made it difficult on consumers to spend more resources. Rational consumers on the other hand use all the means possible to maximize their resources and fulfill all their needs.

Rational consumers also face the difficulty of planning expenditure on their very minimal wages and resources. To optimize this, this bracket of consumers cut expenditure cot on everything expect for the basic human needs. However, they tend to also spend very minimal on the basic needs. According to Blythe rational consumers greatly consider the future of their financial positions. In this way they are categorized as the least spending consumers (132). However, analysts argue that rational consumers’ decision of saving might at the end cost their financial security.

According to Noel saving without spending on investing makes no difference from a person who spends money