1.1.8

Question 1

Self-interested

Answer 1

Diminishing marginal utility means that as consumers consume more of a good/service they are less likely to pay the same price for it as their satisfaction is lost and therefore, they act in a self-interested manner and will consume different combinations of goods and services that fulfill their satisfaction

Question 2

Total utility vs marginal utility

Answer 2

Total utility:
the total benefits derived from consumption in accumulation

Marginal Utility:

Additional benefits gained from additional consumption

Question 3

Rationality

Answer 3

Weights up the costs and benefits to choose the best option

Question 4

Informed decision-making

Answer 4

Access to all information to make rational and informed decisions

Question 5

Incentive

Answer 5

Benefit, reward, or cost that encourages economic agents to act in a particular way

Question 6

Ex. Incentive for a consumer

Answer 6

1. Discounts enable consumers to weigh up the expected costs and benefits and make the right decison when buying the good/service half-price

Question 7

Ex. Negative effect on consumers1.

Answer 7

1. Tax consumption of alcohol (the government will impose taxes on alcohol in order to reduce their consumption as this will benefit society as the accessability to these goods and services diminshes

Question 8

Ex. incentive for consumers

Answer 8

1. Decreased tax rate (this will stimulate economic growth and workers would gain a sense of comfortability as disposable income increases to work for longer hours and readily join the labour force
2. Child care subsides
3. Award employees higher wages through enterprise bargaining

Question 9

Ex. discentive for workers

Answer 9

1. Dismissal for breaching business policy (discouragers workers from breaching the business policy as the policy is made clear in an explicit manner)

Question 10

Traditional Economic Viewpoint of consumers

Answer 10

Humans are rational and self-interested human begins, who maximise the benefit obtained from a decision

Question 11

1.9 Traditional economic viewpoint of businesses

Answer 11

minimising costs to ensure businesses are ensuring cost-effectiveness, in which maximum production can be obtained from minimal resources, in addition to this, ensuring that they obtain maximum profit through adhering to consumer sovereignty and therefore, supplying an increased amount of goods and services which the general population desire