Economic Agents

Question 1

what are economic agents?

Answer 1

They are the households, firms and departments of government that make decisions about what & how to produce & what to consume in the economy.

Question 2

Households as consumers

Answer 2

Houses choose to allocate their scarce resources according to their income. They may have an opportunity cost.

Question 3

Households and work

Answer 3

exchange labour for work

Question 4

Firms

Answer 4

exist in order to produce the goods/services that consumers/governments want to buy. May choose to product 2+ gooods from their scarce resources.

Question 5

Government

Answer 5

Fiscal policy

Regulation

Question 6

Objectives of households

Answer 6

Maximise utility

Question 7

Firms objectives

Answer 7

maximise profits

Question 8

Government objectives

Answer 8

stable environment
sustainable environment e.g. global warming
policies to influence allocation
ensure macroeconomic stability

Question 9

Incentives households

Answer 9

maximise their satisfaction