Economic assumption Flashcards
Name 1 economic assumption
-Consumers aim to maximise their benefit.
-Businesses aim to maximise profit.
What does irrational mean?
Not based on clear thought of proof
What does assumptions mean?
things you think are true although you have no definite proof.
What does rational mean?
Based on clear thought and reason
What does maximize mean?
To increase something such as profit as much as possible
What is opportunity cost?
What potential benefit you are missing out on by picking one thing over the other
Name one reason consumers dont maximise profits
- They find it difficult to calculate the benefits of consuming a product
- They have buying habits that make it difficult to make rational choices
3.They may be influenced by the behaviors of others
4.Consumers do not have access to all the information
Name one reason why Businesses might not maximise profits
1.Charities
2.Caring for customers or high quality product
3.Revenue maximise to increase market shar
4.Sales maximise to increase market share
What does revenue mean
Money made from sales
What does profit mean
money left over once all costs have been paid
