Rational Decision Making

Question 1

What is meant by rational decision making?

Answer 1

That economic agents will make decisions in order to maximise their net benefits.

Question 2

What factors fall under economic welfare (6)?

Answer 2

1) Health.
2) Profit.
3) Safety.
4) Enjoyment.
5) Time.
6) Wealth.

Question 3

What will consumers look to maximise from consumption?

Answer 3

Consumers will look to maximise utility from consuming goods.

Question 4

What will firms look to maximise?

Answer 4

Profits, however this is subjective and can depend on short and long term goals for businesses.

Question 5

What could workers seek to maximise (5)?

Answer 5

1) Income through wages and bonuses.
2) Enjoyment.
3) Job security.
4) Low stress.
5) Social interactions.

Question 6

What does the government seek to maximise?

Answer 6

The benefits to society through economic growth, high employment rates, a reduction in social problems and improvements in the standard of living.