1.2.10 Alternative views of consumer behaviour

Question 1

Rational consumer behaviour

Answer 1

Maximise utility

Question 2

Rational firm behaviour

Answer 2

Maximise profits

Question 3

Alternative views of consumer behaviour - Habitual behaviour

Answer 3

Consumers may be irrational because they are in the habit of making certain decisions e.g. smoking a cigarette

Question 4

Alternative views of consumer behaviour - Herd behaviour

Answer 4

Consumers may be irrational because they are influenced by others e.g. fashion trends

Question 5

Alternative views of consumer behaviour - weakness at computation

Answer 5

Consumer may be irrational because they are bad at making calculations, estimating probabilities and working out future benefits/costs e.g. underestimating the future health costs of smoking