Economic Assumptions

Question 1

What are economic assumptions?

Answer 1

Assumptions based on behaviors of individuals

Question 2

Economists’ opinions on individuals?

Answer 2

They behave in a rational way

Question 3

What do economists use to predict the behavior of variables?

Answer 3

Models

Question 4

2 ways to maximise consumer benefits

Answer 4

1. buying from businesses which gives out with cheaper price
2. if met with same price, choose a better quality product

Question 5

2 ways to increase profit maximisation

Answer 5

1. buying raw materials from suppliers with cheapest price and best quality
2. selling into the market with highest possible price

Question 6

3 reasons why consumers won’t always maximise benefits

Answer 6

1. Amount of benefit can’t be calculated from consumption
2. Influenced by peers or family members into consuming a product
3. Consumption habit including brand loyalty

Question 7

4 reasons why business won’t always maximise profits

Answer 7

1. Influenced by other businesses in a market
2. Main objective isn’t profit maximisation example like social enterprises
3. Operating as charities
4. Alternative objectives

Question 8

Information needed for customer to maximise benefits by buying a product

Answer 8

price, market nature, quality

Question 9

Information needed for business to maximise benefits by selling a product

Answer 9

To buy => raw materials (quality, price)
To manufacture => labour (skills, wages)
To sell => market trend