1.2 how markets work Flashcards
1
Q
rationality
A
economic assumption that:
- individuals (consumers) aim to maximise utility (satisfaction)
- firms aim to maximise profit
2
Q
demand
A
the quantity of good or service that consumers are willing and able to buy at any given price in a given period of time
3
Q
law of demand
A
as price of a good increases, the quantity demanded of a good decreases
4
Q
what causes contractions and extensions?
A
price
5
Q
what causes shift lefts/rights?
A
factors other than price
6
Q
A
