1.1.2 Economic Assumptions

Question 1

What is the economic assumption

Answer 1

Consumers aim to maximise their benefits and businesses aim to maximise profit.

Question 2

4 Main reasons consumers do not maximise their benefits.

Answer 2

1) They find it difficult to calculate the benefits of consuming a product
2) They have buying habits that make it difficult to make rational choices.
3) They may be influenced by the behaviours of others
4) Consumers do not have access to all informationin marked

Question 3

What are some business assumptions

Answer 3

They try to maximise their profits
Charities do not make profit

Question 4

Revenue formula

Answer 4

Price X Quantity sold

Question 5

What is revenue

Answer 5

Money you make from sales

Question 6

Profit Formula

Answer 6

Revenue - cost

Question 7

What does a PPC graph show

Answer 7

a graphical model that represents all of the different combinations of two goods that can be produced