Year 5: Economics And Business Student Workbook Sample

Title:

5: Economics And Business Student Workbook

© 2021 Ready-Ed Publications

Printed in Australia

Author: Tamara Boyer

Illustrator: Alison Mutton

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Contents

Section 1: Understanding Needs And Wants

Needs And Wants 1

Needs And Wants 2

Goods And Services

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Personal And Community Needs And Wants 1

Personal And Community Needs And Wants 2

Needs And Wants In My Community

Debating Needs And Wants

Economy Made Simple

Economic Problem 1

The Economic Problem 2

Consumer Choices And Opportunity Cost

Needs And Wants Word Search

Section 2: Resources 17 Natural, Capital And Human Resources

Resource Types

Resources In My School Community

Resources In The Wider Community 1

Resources In The Wider Community 2

Aboriginal And Torres Strait Islander People’s Knowledge And Use Of Resources 1 23 Aboriginal And Torres Strait Islander People’s Knowledge And Use Of Resources 2 24 Aboriginal And Torres Strait Islander People’s Knowledge And Use Of Resources 3 25 Aboriginal And Torres Strait Islander People’s Use And Management Of Resources 26

Section 3: Personal Consumer Choices

Factors Affecting Consumer Choice

1

2

3

Which Brand?

Unit Pricing Method

Taste Test 1

Taste Test 2

And Special Promotions

A Budget

For A Birthday Party

For A Birthday Party

Methods

Or Card?

Section 1: Understanding Needs And Wants

And Wants

many things

would like to have,

only

of these things are necessary for us to stay alive and stay healthy. These necessary things are called our needs and

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fresh water, clean air, food, shelter, love and warmth. The remaining things that we would like to have are not essential

our survival. We call these things our wants. Anyone who is able to satisfy a need or a want is called a consumer. All of us are therefore

PRODUCER

satisfy their needs and wants mainly by obtaining goods and services. Goods are physical items that can be seen and touched, such as: books, iPods, Lego, etc. Services are activities that people do for others, such as: cleaning, gardening and dog-sitting. Anyone who provides goods or services is called a producer.

to stay

healthy

Activity Needs And Wants

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Needs

one of your family’s

highlight any items which

colour

receipt

the space below. Use one colour

health

wants

survival)

health

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Activity

INFORMATION

Personal And Community Needs And Wants 1

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All people have needs and wants. The kinds of things that an individual can benefit from, such as: a bicycle, a skateboard, a can of soft drink or a new hairstyle are referred to as personal needs and wants. In most cases these goods and services can be obtained from businesses or retailers.

Goods and services that many people in society can benefit from are called community needs and wants. For example, roads, footpaths, public transport, rubbish collection and schools are available to be shared by all members of the community. Usually the government is responsible for providing and maintaining them with money collected from taxes, fares and tolls.

PERSONAL NEEDS AND WANTS

COMMUNITY NEEDS AND WANTS

Complete the table below which summarises the differences between personal and community needs and wants.

PERSONAL NEEDS AND WANTSCOMMUNITY NEEDS AND WANTS

WHAT ARE THEY?

WHAT ARE THEY?

WHO PROVIDES THEM?

WHAT ARE SOME

PROVIDES THEM?

SOME

Activity Personal And Community Needs And Wants 2

Read the following story then identify all of the personal and community needs and wants that are mentioned.

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Max woke up at 7am to the sound of his alarm clock. He only snoozed once before getting out of bed and making his way to the bathroom. Max had a quick shower, dried himself and then brushed his teeth. He got dressed, combed his hair and then went to the kitchen to make some breakfast. After eating two slices of toast with Vegemite and drinking a glass of orange juice, Max said goodbye to his family, picked up his bag and then set off for school. He only had a short walk down the footpath and then through the park. As he reached the cross-walk in front of the school, the attendant asked the students to wait while an ambulance went past. The attendant then stopped the other traffic while the students crossed the road. Max waited eagerly for the bell to ring. Friday was his favourite day at school and he had a great line up of subjects ahead.

PERSONAL NEEDS AND WANTSCOMMUNITY NEEDS AND WANTS

Needs And Wants In My Community

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Activity Debating Needs And Wants

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The difference between needs and wants appears to be fairly straightforward. Needs are those things that are basic to our survival, such as: food, clothing and shelter, while wants are all the extras that we would like to have, but are not necessary in order to live. When we consider specific items, however, the difference is not always clear. For example, is a new pair of shoes a need or a want? The answer to this question depends on a number of factors, including what kind of shoes they are, how many pairs of shoes the person buying them already has, in what kind of environment the shoes will be worn, and how expensive the shoes are. When engaging in this type of analysis it is possible to see how one person’s need could be another person’s want.

Consider each of the following. Under what circumstances, could each item be classed as a need? Under what circumstances, could each item be classed as a want?

Activity The Economy Made Simple

A

the two main parts

of all the people who demand

consist of people

share

of

common

a system

diagram below

and producers.

use goods and services.

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common goal that

goods and

Student

The Economic Problem 1

Although it would be nice, most people realise that they will never be able to fully satisfy all of their wants. This is because there are no limits to what we want. Even after we are able to satisfy certain wants, others will often arise. For example, a person who buys a gaming console will probably want to buy games to play on it. Depending on the type of games that they buy, they may then also want accessories, such as additional controllers and steering wheels. People’s wants also change over time. For example, the kinds of things that you want now are likely to be different to what you wanted when you were 5 years old and by the time you turn 15 they are very likely to be different again. Other factors that influence what people want include the time of year, advertising, peer pressure and affordability.

$ $

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Compared to our unlimited wants, the resources that we have to satisfy them are limited or scarce. Some people refer to this situation as ‘the economic problem’ because it creates a dilemma where people are forced to decide between their various competing wants. For example, think about all your personal wants and then consider how many of these goods and services you can actually afford. You have probably even had to choose between buying one item or another in the past. In the same way, governments often have to decide how limited resources will be allocated to meet the unlimited wants of the community. For instance, if too much money is spent on improving hospitals, there may be less money to spend on education. Making choices like this is difficult because both services are important for and valued by the community.

We need better hospital facilities. We need a SUSTAINABLE solution. Spend MORE on Education.

While most people understand what they can and can’t afford with the money that they have, they sometimes forget that it is not just money that is limited. The quantity of natural, cultural and human resources available to satisfy our needs and wants on a long-term basis is also scarce. We must therefore make sure that resources are used in a sustainable way. This means that we must decide on the most efficient ways of using resources and be careful not to waste them so that they will be available for both current and future generations to satisfy their needs and wants.

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Activity Consumer Choices And Opportunity Cost

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One of the key problems faced by consumers is that they are unable to afford every good and service that they would like to buy. Decisions therefore need to be made about which wants to satisfy immediately and which to give up or delay. Those things that consumers choose to give up are referred to as the ‘opportunity cost’ because by spending their money on one thing, they have lost the opportunity to buy something else. For example, imagine that a person who has only $20 left to spend is choosing between going to the movies that day and buying grocery items for the family’s evening meal. If he/she chooses to go to the movies then the ‘opportunity cost’ will be dinner for the family. If he/she chooses to provide dinner for the family then the ‘opportunity cost’ will be the movie.

Every consumer choice has positive or negative outcomes. When making a decision it is necessary to look at all the benefits and costs that go along with each choice. The best choices are the ones that result in the most benefits and the fewest costs. Wise consumers use this process to help prioritise their needs and wants. They understand that the decisions that they make can have a significant impact on their quality of life.

Define the term ‘opportunity cost’.

Identify the ‘opportunity cost’ in each of the following scenarios.

George had $1. It costs him $1 to take the bus from school to his house. It is hot at lunch-time so he uses his $1 to buy an ice cream.

Lucy’s parents gave her the choice of having a birthday party or going to see her favourite band in concert. Lucy chose to go to the concert.

Discuss the benefits and costs associated with each of George and Lucy’s choices. Do you

think that they made the best choices? Explain.

T J A G X E D M U R Z K X Z T J W B D E R A K F K P Q X P U E D K S K O L A W S S E C I O H C Y O R S S O U R R A R D G S W D U O I E Z M K T C O G X B J E X Y G M B Z P B N U N O Y P M U E N E Y R L C O L W Y Q B Q Z T N T K N R N Z C S B O P O I R X S G I L H O E V I C H T E M S J A D I O S N D V Y F C Z C X E B R E T C Y C S L U D F J I P Y E F I B S V T S X P P E T B C Q T X K L P E M V O I S Z G I A R F C O S N M D V Q J X L G C Y Q E Z O W Y V K M U N U I Q Z R H G E S Y Q P S U S T A I N A B L E F K F A S Q Q P B X V Q R M W J D L F W I W G E L C O L G I C K Q Q A J X Q V X R P L V Q L Y P B N A L H S Y I U T J W G T R I V C N K A M O R J J M P S H H V M X T N L C F E N D R L Y I Y W A N T S M R W E G A Z T J N A B Z C K C Y L A Q I P S E D B

B D P G K F Y S A U F F W L X H F Y C

Section 2: Resources

Natural, Capital And Human Resources

A resource is anything that has some form of use or value. In order to satisfy the needs and wants of consumers, producers use resources to supply goods and services. There are three main types of resources: natural, capital and human.

Natural Resources

Natural resources refers to anything that exists without humans having put them there. Examples include: the oceans, earth, soil, forests and animals. Mineral and energy resources, such as: gold, diamonds, coal, oil and natural gas, are also classified as natural resources which can be used for production.

Capital Resources

Human-made objects and technology which are used to produce goods and services are referred to as capital. Examples include: a truck used to transport goods, the desk that someone works at and the tools used by a tradesperson.

CONSUMERS’ NEEDS & WANTS PRODUCERS USE RESOURCES NATURAL RESOURCES

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Human Resources

Human resources include people themselves and the work that they carry out. This includes: physical labour, such as the kind of work a bricklayer does, as well as mental labour, such as the kind of work an office worker might do. When people have the skills and expertise which enables them to organise the entire production process, this is referred to as enterprise. These people, known as entrepreneurs, often hold high positions within a business including: owners, managers, principals and project officers. They are often described as ‘the brains’ behind the business because they are able to generate new ideas and manage natural, capital and human resources in order to make their ideas become a reality.

CAPITAL RESOURCES

HUMAN RESOURCES

Activity Resource Types

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In My School

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Student Information Resources In The Wider Community 1

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If you’ve ever had a drink of milk, eaten a sandwich or consumed a meal from a local food establishment, then you have enjoyed some of the many conveniences of our readily available food supply. However, how often have you considered what resources are used to produce those foods for your consumption? The phrase ‘farm to fridge’ refers to the stages of food production, from growing crops and raising livestock to supermarket sales and consumption. An investigation of these stages enables us to gain an appreciation of the natural, capital and human resources involved in our food production systems.

The Dairy Industry – Farm to Fridge

Every year the average Australian drinks 106 litres of milk, eats over 13 kilograms of cheese, uses nearly 4 kilograms of butter and consumes 7.5 kilograms of yoghurt. Many other products, including muesli bars, chocolate, soups, breads and cakes also have milk as an ingredient. So what resources does the dairy industry use to meet the dietary needs and wants of the wider community?

The first stage of dairy production involves the raising of cattle on dairy farms for milk. In 2013 there were approximately 6,400 dairy farms in Australia, with an average herd size of 258 cows. Most farms are family owned and operated, and may employ an additional labourer or farmhand. Farms generally consist of: a homestead where the family live, large machinery and a storage shed, the dairy (where the cows are milked), storage vats for the milk and numerous paddocks divided by fences.

Cows kept for their milk will be left to graze in the paddocks all day and eat a variety of grasses. Farmers use fertilisers and irrigate their pastures to help them grow. Milking of the cows occurs twice a day, usually at around 5.30 am and 3.00pm. In the early years of the dairy industry, cows were often milked by hand, but today, large milking machines such as the rotary dairy, which allows up to 20 cows to be milked at the same time, have made the milking process much more efficient.

Each day tankers transport the milk from the dairy farms to the nearest processing plant or factory. The milk is then pumped into large insulated vats before undergoing two important processes. First, the milk is pasteurised to kill any harmful bacteria, then it undergoes a process called homogenisation, which makes the milk smooth and creamy.

to

The final stage at the processing factory is to turn the milk into a variety of dairy products including: yogurt, cheese, cream, ice cream, butter and other types of milk such as: skim, reduced or low fat, long life, flavoured, powdered or condensed milk. From the time that the milk is received at the factory, it can be processed and packaged within 12 to 16 hours before being transported in trucks to retail outlets.

Resources In The Wider

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Student Information Aboriginal And Torres Strait Islander People’s Knowledge And Use Of Resources 1

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The First Australians

Australia has two distinct indigenous groups - Aboriginal Peoples and Torres Strait Islander Peoples. Archaeological evidence suggests that they have lived continuously in Australia for over 50,000 years. At the time of European settlement, approximately 600 different clans or ‘nations’ are estimated to have lived around the continent, each with their own language, cultural traditions, spiritual beliefs and unique identity. Despite their diversity, each group shared in common a rich connection to, and relationship with, its land or place, often referred to as ‘Country’.

Connection to ‘Country’

All cultures have stories about creation. For the Aboriginal Peoples, this time has been translated into English as the ‘Dreaming’. Torres Strait Islanders do not use the term ‘Dreaming’, although they do have similar creation stories and beliefs. While these stories vary depending on the regions in Australia that they originated from, many have in common the giant spirit creatures or ancestral beings that created the environment that we know today, including the land, sea, sky, waterways and living things. Passed on orally for thousands of years, they illustrate the spiritual connection between the people, their places and their environment.

Natural Resources

The Aboriginal and Torres Strait Islander Peoples had an excellent knowledge of their local areas, the diversity of plants and animals found there, and a deep understanding of the seasons. As a result they were able to utilise the natural resources that the land had to offer. Access to fresh water, food, materials for tool-making, building and everyday living depended on the location in which a clan lived. Some hunted animals such as kangaroos for their meat and used their skins to keep warm. Possums, birds, snakes, goannas, fish, lobsters, eels and tortoises were also captured by certain groups, while shellfish, fruit, seeds, roots, witchetty grubs and other kinds of ‘bush tucker’ were gathered. Rivers, waterholes and underground reservoirs provided fresh water.

Capital Resources

Natural resources were used to make capital resources, such as shelter, tools and implements, and reflect the geographical location of different groups. For example, coastal tribes used fish bones and shell to tip their weapons, while desert tribes used stone tips. Implements such as: knives, scrapers, axe-heads, spears, digging sticks and various vessels for eating and drinking were common to numerous tribes throughout the continent.

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Activity

INFORMATION

Aboriginal And Torres Strait Islander People’s Use And Management Of Resources

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In many Aboriginal Dreaming stories, the ancestral beings responsible for creation often spoke to the tribal Elders and made the local people guardians or custodians of the land. This is why the people have a very special meaning of ‘Country’ that goes beyond the supply of food, water and other resources. Their spiritual and cultural connections to the land oblige them to look after the sites of their ancestors.

Traditional Land Management Practices

Read the examples of ways in which traditional Aboriginal Peoples used resources to meet their needs and wants without over-exploiting them.

Some clans developed a nomadic lifestyle, moving seasonally between locations so

• that water supplies were given a chance to renew.

• Enough seeds were left so that there would always be new growth.

Eating a large variety of foods meant that no one food source was depleted.

• The young of any animals, or females still caring for their offspring, were rarely

• killed.

• ensure the survival of the species.

When collecting eggs from a bird’s nest, some were always left to hatch in order to

Unfortunately, many Aboriginal People’s connections to the land were broken after the time of European settlement in Australia. It is estimated that up to 70% have lost their traditional connection to Country and knowledge about the use and management of resources. Today, Elders and their people, who have had this knowledge passed on to them, are working with both Indigenous Australians and non-Indigenous Australians

Read the poem ‘The Land’.

1. Highlight three lines which you believe reflect the spiritual and cultural connections between the land and the people.

Explain the obligation that

Aboriginal Peoples have to manage the land.

The Land

We have walked on the land for thousands of years.

We are caretakers of the land not owners of the land.

We are one with the land.

We hunt on the land, the land feeds us.

We make all uses of the land.

We have cultural ceremony on the land.

We have all-embracing knowledge of how the land changes and how to adapt to that change.

We know how to read the land.

We communicate with each other concerning the land. The land is part of our dreaming.

Poet Unknown

Taken

‘Understanding

through the Eyes of the Ngunnawal People: A Natural

ACT Schools’.

Section 3: Personal Consumer Choices

Activity Factors Affecting Consumer Choice

Every day, consumers make decisions about which goods and services to buy. With so much choice on the market, it can often be difficult to decide which product to purchase. Below are some of the factors that influence these decisions.

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Provide an example of a time when you or someone who you know has been influenced by each factor below.

PRICE

When prices are lower, consumer demand for products is usually higher. Producers often consider this when they lower their prices in order to increase their sales.

CONSUMER TASTES

Consumers often know what they like and prefer to stick with those products. For example, some people prefer the taste of Vegemite over other similar spreads.

TASTE

AVAILABILITY OF ALTERNATIVES

Goods and services which can be used as a substitute, such as margarine instead of butter, can often influence consumer choice, particularly if factors such as price and nutrition are valued.

NUTRITION

ADVERTISING

Advertising is a strategy which is used to inform consumers about a product or persuade them to buy it. A good advertising campaign can influence consumers to make a purchase.

BUY THIS

FASHION

Current trends in clothing, footwear and accessories, worn by celebrities, seen in magazines or on television, often become popular choices for consumers.

PEER PRESSURE

Consumers are sometimes influenced by the purchases made by their friends or people of a similar age or gender.

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Activity Advertising 1

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Advertising is a strategy used to inform consumers about a product or persuade them to buy goods and services. Advertising is everywhere - on the television, the radio, online, in newspapers and magazines, on billboards, public transport and at sporting events. Everyday, messages presented through advertisements are both consciously and unconsciously absorbed by potential consumers and often influence their behaviour. Consumers may be targeted according to their age, gender, interests or activities. Advertisements attract consumers’ attention by one or more of the following strategies:

brand• names – the names of the products being marketed; logos• – graphic images used to represent the brands so that they can be easily recognised by consumers; slogans• – short, often catchy phrases that consumers can associate with the product. On television and on the radio, these may be sung or form part of a jingle in order to remain in the memories of listeners; language and images• – phrases and images are carefully chosen to attract the attention of the target audience. Persuasive advertising uses language together with images that are often exaggerated in order to convince consumers that they must have the products, while informative advertising presents consumers with selective factual information; other advertising techniques• – strategies used to appeal to a target audience may include the use of humour; the inclusion of beautiful people such as models and celebrities; the promise of popularity, happiness, success or beauty; bribery (for example buy one get one free); play on the consumers’ fear of ill-health or lack of safety; sentimental images including families, children and pets; scientific evidence that a product really works; the use of repetitive language, for example ‘Save! Save! Save!’ may also be used to emphasise a particular message and commit it to the buyers’ memories.

Identify two advertisements that you have seen on television that either appeal to

you or appear to be effective in attracting the attention of consumers.

Television advertisement (product or brand).

How the advertisement appeals to consumers. (Refer to its use of language, images and other advertising techniques.)

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Activity Which Brand?

Identify the brand names associated with the following well-known slogans.

Slogans

The flavour really hits you.

Just do it.

Think different.

The spirit of Australia.

The fresh food people.

Lowest prices are just the beginning.

Eat fresh.

Taste the rainbow.

Your potential; our passion.

Connecting people

Brand Names

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Read this information to help you with the tasks on the following page.

INFORMATION

The large number of brands in almost every category of goods and services can sometimes be overwhelming for consumers. With so much choice on the market, it can be difficult to decide which good or service to buy. One method that can be used, particularly when shopping for expensive goods and services, such as computers, televisions and repairs, is known as comparison shopping. The strategy works by comparing the price and features of a particular product with other similar products on the market before making a decision. As the advertised price is not always the lowest, consumers can often negotiate a better price with sales assistants by mentioning that they have obtained quotes from other suppliers and requesting a further discount. This can result in considerable savings and greater customer satisfaction.

to

When shopping for less expensive products, such as common grocery items, the unit pricing method can be used to calculate the cost of goods by weight or volume. This strategy enables consumers to compare the prices of different brands, especially when they are packaged in different quantities. It also prevents consumers being misled by words and phrases such as ‘value pack’ and ‘25% extra’ on larger packages of the same brand, which do not always provide better value for money.

compare

Activity The Unit Pricing Method

This

The unit pricing method uses the following formula to calculate the cost of goods by weight or volume. Before substituting values into the formula however, you need to ensure that the units are the same for each product’s weight or volume that you are comparing.

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Cost per unit = price (in cents) / weight or volume

Example

A popular brand of cereal advertises its large 750 gram box for $5.95. This month it is also advertising a 1 kilogram value pack for $8.00.

Box A: 750 grams $5.95

Cost per unit = price (in cents) / weight = 595 cents / 750 grams = 0.79 cents / gram

Box B: 1 kilogram (1000 grams) $8.00

Cost per unit = price (in cents) / weight = 800 cents / 1000 grams = 0.800 cents / gram

In this case, Box A (750 grams) is better value for money even though the larger box (1 kilogram) claims to be a value pack.

A popular brand of soft drink is available in the following sizes and price range. Use the unit1. pricing method to calculate the price per millilitre for each size of soft drink. Remember there are 1000 millilitres in every litre!

375 ml can = $1.201.25 litre bottle = $2.492 litre bottle = $4.29

Which size soft drink provides the best value for money?2.

Apart from the unit price what other factors might influence a buyer’s decision to choose3. between the different sized soft drinks?

Activity Blind Taste Test 1

This

What You Will Need

Three different brands of the same product such as cola, bottled

water, potato chips or chocolate (enough for each member of the class to have a taste). Use at least two well-known brands and one home brand.

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Small cups, plates or napkins for each member to taste the products

as needed.

Instructions

Declare any food allergies before carrying out the activity.

Discuss the kinds of things that people would consider when deciding between brands.

For example, consumers of cola might consider criteria such as flavour and the amount of fizz. Choose two criteria for each product and enter them in the table below. Make a prediction about which of the three brands you would be likely to choose prior to3. completing the blind taste test.

Carry out a blind taste test and record your findings in the table below. Sample trays of4. the product should be prepared ahead of time so that there is no evidence of the brand names or packaging to influence those who are sampling.

the brands 1-3 in order of preference.

Analysing the

Blind Taste Test

book

Activity Sales And Special Promotions

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Price is one of the most important factors affecting the behaviour of consumers. When the price of a particular good or service is high, consumers are generally less willing to make a purchase, and their demand for the product tends to be lower. However, when the price of a particular good or service is low, consumers are generally more willing to make a purchase, and their demand for the product tends to be higher. Producers often apply this concept when they want to increase their normal sales at certain times of the year.

Examples of special promotions used to influence consumer behaviour include: sales such as ‘end of financial year sales’ and ‘boxing day sales’;

store specials such as ‘25% off ’ and ‘buy two get one free’;

discount vouchers, for example ‘15% off your next purchase’.

Such promotions are often used by businesses for items that may be hard to sell, overstocked or purchased under a special deal from the manufacturer. Time constraints, such as ‘for a limited time only’ and ‘only 3 days left’, may be used to create a sense of urgency in consumers so that they feel they can’t postpone their decision to make a purchase. Once attracted to a store by the deals presented, they may then be tempted to buy other goods and services on the spur of the moment. This is known as ‘impulse buying’ and can lead customers to make unplanned purchases that they may not have originally needed, wanted or budgeted for. Discount vouchers such as ‘15% off your next purchase’ are also used by retailers to entice customers to return to the store. The catch, however, is that they have to spend more money in order to receive the deal.

Collect a range of flyers and catalogues used by retailers to advertise1. in your local area. Create a collage of sales and special promotions.

how price influences the spending behaviour of consumers.

Activity Having A Budget

INFORMATION

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An effective strategy often used to help individuals make smart consumer choices is personal budgeting. A budget is a plan for spending and saving money over a period of time. It consists of two parts – income and expenditure. Income is money that comes into your budget from sources such as work. Some young people also receive an allowance or pocket-money from their parents or guardians. Expenditure is money going out from your budget. In other words, it is the money that you spend. By subtracting the total expenditure from the total income, the balance of a budget can be calculated. Wise consumers will try and make sure that their expenditure is less than their income so that they have money left over to save. People who are able to save money over a period of time are often able to satisfy more of their wants and buy more expensive goods and services in the future. Below is an example of one student’s personal budget for a period of one week.

INCOME

Pocket money/allowance$10.00

Job – walking the neighbour’s dogs $10.00

Total Income$20.00

EXPENDITURE

Purchase lunch from school canteen twice a week $7.00

Bus fare to and from school$9.00

Total Expenditure$16.00

Balance = Total Income – Total Expenditure = $4.00

How much money was the student able to save during the week?

If the student was able to save that same amount of money every week, how much could2. he/she potentially save over the periods of a month and a year and what could they buy with their savings? Record your answers below.

Total savings

What could they buy?

After 1 month

After 1 year

Explain what a wise consumer will attempt to do when planning a budget.

Activity Budgeting For A Birthday Party 1

INFORMATION

This is a Ready-Ed Publications' book preview.

It’s your birthday and you are planning on having a party to celebrate. Your parents have given you a budget of $100 to spend on the party and any money that is left over is yours to keep! In order to stay as close to your budget as possible, you have decided to invite only 10 friends and have the party at your house. You already have an outfit to wear, have organised music and have sent the invitations out by email. The only things left to buy include food, drinks, a cake, candles and decorations.

Prepare a budget for your party. Use an online store such as Woolworths or Coles to find prices for the items listed. Follow the links to ‘shop online’ to search for specific goods. Record the prices for each item then add up the total expenditure.

PARTY ALLOWANCE

PARENTS

EXPENDITURE

Multipack of chips Cordial

Lollies party mix x 3 Plastic cups

Variety pack of party pies and sausage rolls Birthday cake

Tomato sauce Candles

Pizzas Balloons

Paper plates Streamers

drink Birthday banner

$100

INCOME

Income

Student Information Payment Methods

Consumers can select from a variety of payment methods when purchasing goods and services. The most common forms of exchange in Australia are made via cash, debit and credit cards.

This is a Ready-Ed Publications' book preview.

Paying with Cash

Cash refers to money in the form of notes and coins. Many consumers prefer to use cash because all retailers accept this payment method and transactions take place instantly. Another advantage of using cash is that it is relatively easy to keep track of personal spending because people generally know how much money they have on them. However, cash is not very secure and once it is lost or stolen, it can be difficult to trace and prove exactly how much you had. Some customers also prefer to use less bulky methods of payment, especially when purchasing more expensive goods and services.

Paying with Card

Electronic funds transfers at point of sale (EFTPOS) allows consumers to pay for items directly from their bank account using a plastic debit card and a personal identification number (PIN). Debit cards are different to credit cards because they are linked to accounts that contain money that you have already earned or saved. In contrast, credit cards are linked to accounts containing money that has been borrowed from the bank. At the end of each month, customers who use credit cards for purchases are charged an additional amount of money called interest on any money that has not been paid back to the bank. As a result, many consumers, especially those who find it difficult to stick to a budget, fall into debt as they have been unable to pay back the money loaned.

Both debit cards and credit cards are relatively quick and convenient forms of payment accepted by most retailers, including online. However, some stores and market places still operate on a strictly cash only basis. In such instances, consumers use their cards to withdraw cash from an automated teller machine (ATM) before they make a purchase. This can sometimes be more expensive as some banks charge a fee for using their ATM. Cash withdrawals made with credit cards also cost extra.

In terms of security, debit cards and credit cards are considered safer than carrying cash because if they are lost or stolen they can be cancelled quickly over the phone. They also can’t be used unless the person in possession of them knows the unique PIN. However, new technologies, such as paypass and payWave, now enable purchases to be made without using a PIN. While this has made shopping faster and more convenient, customers must be extra careful not to lose their cards as they can quickly be misused.