Consumer behaviour

Question 1

Research that adds elements of psychology to traditional models in an attempt to better understand
decision-making by investors, consumers and other economic participants.

Answer 1

Behavioural
economics

Question 2

Is something that motivates economic agents (consumers, firms, workers, governments) to behave in a certain way.

Answer 2

Incentives

Question 3

The amount of utility derived from consuming one more unit of output.

Answer 3

Marginal utility

Question 4

Signals that motivate economic actors to change their behaviour perhaps in the direction of greater
economic efficiency.

Answer 4

Market incentives

Question 5

The assumption that producers wish to produce an output that will create maximum profit levels.

Answer 5

Profit maximisation

Question 6

Involves the weighing up of costs and benefits and trying to maximise the surplus
of benefits over costs.

Answer 6

Rational choice

Question 7

The total satisfaction received from consuming a given amount of a good or service.

Answer 7

Total utility

Question 8

Is a measure of the satisfaction that we get from purchasing and consuming a good or
service.

Answer 8

Utility

Question 9

The assumption that consumers behave rationally in allocating their limited budget between different products so as to maximise total satisfaction from their purchases.

Answer 9

Utility maximisation