economic assumption

Question 1

What are the underlying assumptions in economics regarding consumers?

Answer 1

Consumers aim to maximise their benefit

This assumption suggests that consumers make choices that provide the greatest satisfaction or utility.

Question 2

What are the underlying assumptions in economics regarding businesses?

Answer 2

Businesses aim to maximise their profit

This assumption indicates that businesses make decisions to increase their financial returns.

Question 3

Name a reason why consumers may not maximise their benefit.

Answer 3

Consumers are not always good at calculating their benefits

This can lead to suboptimal choices that do not maximize their utility.

Question 4

Name another reason why consumers may not maximise their benefit.

Answer 4

Consumers have habits that are hard to give up

These habits can influence purchasing decisions and limit rational behavior.

Question 5

What is another factor that may prevent consumers from maximising their benefit?

Answer 5

Consumers sometimes copy others’ behaviour

This social influence can lead to decisions that do not reflect personal benefit maximization.

Question 6

Name a reason why producers may not maximise their profit.

Answer 6

Producers may have managers that revenue maximise or sales maximise

This indicates that the focus may be on increasing sales or revenue rather than profit.

Question 7

What is another reason producers may not maximise their profit?

Answer 7

Producers may prioritise caring for customers

This focus on customer satisfaction can sometimes come at the expense of profit maximization.

Question 8

What is a third reason why producers may not maximise their profit?

Answer 8

Producers may complete charitable work

Engaging in charitable activities can divert resources away from profit-maximizing strategies.