UNIT 3
THE CONSUMER SECTOR
Role of an Individual
The active members of the society play several roles,
namely that of a citizen, worker, consumer, and
entrepreneur.
1. As a citizen. An individual has civic and patriotic
duties to perform as a citizen. The responsible citizen
obeys the laws of the land. By paying correct taxes, the
citizen sacrifices part of his income to help government
finance its operations. He voices out his opinion on
significant issues and policy concerns that affect him,
his community, and his country. He complies with his
duty to elect competent people in government service.
He performs his patriotic obligation when called upon
to defend his country from internal and external
aggressors and enemies.
2. As a worker. The individual is a productive member
of the economy. Unless physically or mentally
incapacitated, he earns his keep through employment in
either a managerial of nonmanagerial job. He constantly
develops himself for a higher things to deserve higher
pay and, therefore, to enjoy a higher living standard.
Perhaps without realizing it, the ambitious worker does
his share toward the economic growth of his country.
3. As an entrepreneur. The person with the
entrepreneurial spirit invariably engages in business. He
invests his lifetime savings and invites friends to join
him in promising ventures. Collectively, entrepreneurs
comprise the country’s private business sector. They
expand existing industries and build new ones, thereby
creating countless job opportunities. The business
sector invests wealth to create more wealth and
prosperity.
4. As a consumer. People go to work or enter business
in order to earn money. Enough money to buy what
they need and want. Consumers comprise the collective
market for the economy’s producers. At the same time,
the wise consumer realizes it is in his self-interest to
economize, save some money, even as he stays vigilant
and protective of his consumer rights. Furthermore, the
consumer uses credit only when absolutely necessary,
knowing that doing so mortgages his future income.
Kinds of Income
1. Wages/salaries. Individuals employed in private
business and government service receive compensation
for their services. In economics, the compensation paid
common workers is known as “wage.” Common
workers are normally called daily-wage earners.
“Salaries,” on the other hand, are paid to regular or
permanent employees. Wage earners and salaried
personnel also receive allowances, paid vacation, sick
leaves, and other fringe benefits. The complete
compensation package received is called reward
system. Different employees offer different reward
systems. An individual who retires is entitled to an
income called pension.
2. Rent. Rent is income or compensation received when
a certain asset or property is leased. Leased properties
include land, farms, houses, apartments, market stalls,
store spaces, offices, buildings, machinery and
equipment, motor vehicles, and so forth. Rental income
is usually derived from business although many rent out
facilities in their personal capacity.
3. Interest. Interest is income or compensation received
when money is lent. An individual earns interest when
he lends money to another person, the government (by
buying bonds, for example), or a bank. A person who
deposits money in a bank is actually lending his money
to that bank. He could take back his money by simply
withdrawing it.
Banks, financing firms, pawnshops, and other
lending institutions earn interest every time they lend
money to borrowers.
“Interest” is alternatively called the “cost” or
“price” of money. Strictly speaking, “interest” may also
be considered as “rent” for the use of money.
4. Profits. Profit is the excess of revenues over expenses.
In corporations and cooperatives, only part of the total
profit is usually paid and distributed to the owners. That
portion is called “dividends.” The undistributed profit
kept in the business for growth and expansion purposes
is called retailed earnings.
The case of single proprietorship and
partnerships, however, is different. The entire profit
goes immediately to the respective owners.