1.2.1 Rational decision making

Question 1

Assumptions of rational economic decision making:

Answer 1

• Consumers aim to maximise utility
• Firms aim to maximise profit
• Governments aim to maximise social welfare

Question 2

Homo Economicus:

Answer 2

Homo Economicus, who makes decisions by calculating the utility gained from each decision and chooses the one which will give them the most satisfaction