Economic Decisions

Question 1

Economic Agents and their Objectives

Answer 1

Households (maximise satisfaction)
Firms (maximise profits)
Government (maximise welfare of of citizens of the country)

Question 2

Factors influencing Economic decisions made by CONSUMERS

Answer 2

Income
Level of education
Peer Pressure (Trends)
The rate of interest
Natural disasters
Political climate

Question 3

Factors influencing Economic decisions made by FIRMS

Answer 3

Demand
Costs
Profitability
Resources
Industrial relations

Question 4

Factors influencing Economic decisions made by GOVERNMENT

Answer 4

Governments have to make decisions as to how to allocate limited resources amongst all those entities competing for their use.
Governments also influence the economic decisions of consumers and firms.
Th government may seek to prevent consumers from consuming goods and services which are harmful or dangerous to health and safety. Like placing regualtions or implementing laws which prohibit the comsumption of drugs OR DISCOURAGE THE CONSUMTION OF GOOD BY PLACING HEAVY TAXES ON GOODS SUCH AS ALCOHOL, INCREASING THE PRICE OF THE GOOD

Question 5

Marginal Analysis

Answer 5

the analysis of situations where a decision has to be made by changing a unit. Usually, these decisions are made in order to achieve some objective.

e.g. when a consumer has to decide to buy another slice of pizza
or a firm, to purchase an additional piece of equipment
or the govt to buy another bus public transport