Rational Decision Making

Question 1

Rational decision making suggest that consumers will act in a way that will maximise …
Fill in the blank

Answer 1

utility

Question 2

What does utility mean in economics

Answer 2

Happiness a product brings

Question 3

Rational decision making suggests that firms act in a way that will maximise …
Fill in the blank

Answer 3

Profits

Question 4

Why dont firms maximise revenue instead of profits

Answer 4

Because total revenue does not take into account total costs which is what makes up total profits

Question 5

In what situations might consumers not maximise utility

Answer 5

When the behaviour of others affects our decisions (friends/family)

Question 6

What is habitual behaviour? And explain why it is not rational decision making

Answer 6

When consumers are in the habit of doing something they end up overlooking better alternatives losing out on extra utility ( i.e. addiction)

Question 7

What is weakness at computation in economics? And why is it not rational decision making

Answer 7

When consumers miscalculate the actual price of products which leads to bad choices,not fully maximising utility