Individual Economic Decision Making

Question 1

Personal net benefits

Answer 1

Utility received by an individual, once the costs of the decision have been subtracted from the benefit

Question 2

Utility

Answer 2

Satisfaction received from the consumption of a good or service

Question 3

3 ways individuals act rationality

Answer 3

1. Valuing all costs and benefits and weighing them up
2. Make the decision that maximises their personal net benefits
3. Identify all costs and benefits of each of the choices available to them