Economic Assumptions Flashcards
1
Q
Assumption
A
Consumers aim to maximize benefit while businesses aim to maximize profit.
2
Q
Reasons consumers don’t maximize profit
A
They find it difficult to calculate benefits of consuming product.
They have buying habits that make it difficult to make rational decisions.
3
Q
Reasons businesses don’t maximize profits
A
Charities aren’t made to profit.
Caring for customers or high quality product.
4
Q
Profit (formulae)
A
Revenue - costs (P = R - C)
5
Q
Revenue (formulae)
A
Price x Quantity sold (P x Q)
6
Q
Sales Volume (formulae)
A
Quantity of sale made
