LS7 - Decision Making in Economics

Question 1

Deduction

Answer 1

Assumption based on hypothesis

Question 2

Induction

Answer 2

Collecting evidence to make assumptions

Question 3

Rational decision

Answer 3

Economic agents are able to rank the order of the different outcomes from an action, in terms of net benefits.
Making decisions that maximise utility (satisfaction and benefit)

Question 4

Maximisation - Consumers

Answer 4

Maximise economic welfare, utility/satisfaction consuming goods - making choices by comparing utility

Question 5

Maximisation - Workers

Answer 5

Wages, job security, satisfaction from the job, commute

Question 6

Maximisation - Firms

Answer 6

Increase profits - producing as efficiently as possible and meeting consumer needs and wants

Question 7

Maximisation - Governments

Answer 7

Welfare of citizens

Question 8

To make rational decisions economic agents require …

Answer 8

1. Time
2. Information
3. Ability to process information