Economic assumptions Flashcards
What is the first economic assumption?
Consumers aim to maximise their benefits.
How can the first economic assumption not always be correct?
Consumers will always look for the best price.
Consumers will look at the reviews.
Consumers will look at the quality.
What does revenue mean?
Money made from sales
What does profit mean?
Sales revenue - total cost
What is the second assumption?
Businesses will aim to maximise their profit.
How can the second assumption not always be correct?
If the business is a charity.
Caring for the consumers or high quality product.
Revenue maximise.
What is 1 main reason consumers do not maximise their benefits?
They find it difficult to calculate the benefits.
Buying habits make it difficult to make rational choices.
What does Rational mean?
Based on clear thought and reason.
What does Assumptions mean?
Things you think are true although you have no evidence or proof
What does Maximise mean?
To increase something such as profit as much as possible.
