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Warm Up

Warm Up. What steps do you think goes into making a rational decision?. Decision Making Process. Specify Identify the need/want Determine your goals Search Gather information Sift Look at all your options and opportunity costs Select Make a choice Study Evaluate the results.

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Warm Up

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  1. Warm Up What steps do you think goes into making a rational decision?

  2. Decision Making Process • Specify • Identify the need/want • Determine your goals • Search • Gather information • Sift • Look at all your options and opportunity costs • Select • Make a choice • Study • Evaluate the results

  3. Specify • Need or want: footwear • Goals: • Sandals • $30 or less • Stylish

  4. Search • Compare sandals from 4 stores • WATCH out for impulse purchases! Guess What? Retail and grocery stores place small, inexpensive items near the checkout counter because they know customers will buy them on impulse!

  5. Sift • Look at your options • Black leather for $28 • Plain tan fabric for $25 • Look at your opportunity costs • Leaning toward leather because they will last long • Opportunity cost is the second best use for the $3 that would be in your pocket if you bought the $25 fabric pair • Trade off of choosing the fabric pair is the shorter life of the sandal

  6. Select and Study • Compare the benefits and cost of each option • Evaluate your purchase

  7. Closure • Why is making a rational buying decision important? • Why not just go to the mall and spend all your money? Explain trade-off.

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