Savvy Consumer & Efficient Producer

Tip to a Consumer

A consumer needs to know what he has to buy. It is only after this that he can allocate his money efficiently in buying what he wants to. In this way,he reduces the opportunity cost of buying other unimportant things. For example,when a consumer walks into a shop with $100,he is attracted to buy all sorts of items that are on display. However, he has to be firm on what he needs to buy and not get swayed into buying other things. Therefore, the efficient allocation of his limited resources is very useful for a consumer to reduce the cost for himself.

Just like a housewife who goes to a supermarket to buy household groceries. She has a must buy
list of items that are required. A savvy housewife will only buy just what is required,and where possible, will also buy alternate generic brands which are cheaper, hence reducing overall costs to the household.

Tip to a Producer/Business Owner

A producer can invest in latest machines that have the ability to speed up the production process. For example,if the cost of production for 10 shoes using a simple machine is $100,then one shoe will cost the producer $10. However,if he uses the latest technology,then the process of production would be faster than usual and now the machine may produce 20 shoes. In this case,the average cost of production for each shoe would decrease to $5 dollars only. A producer should therefore invest in latest technology as the profits gained would definitely outweigh the the cost of machinery. Over time,he will recover the cost of the machinery and make much more money;hence,maximising his productivity.

SOURCES: Discussion with business owner (dad),
Inputs from analyst (brother),
General websites over the internet.

Munisha Kumra 5X