theme 2 Flashcards
before making decisions what do firms do
make assumptions about why consumers use their brands
what do consumers want from brands
maximum satisfaction (utility)
what do firms aim to do
firms aim to make as much profit as possible
what is profit
the total revenue a firm recives from selling its product minus the total cost of producing it
what do we assume about consumers
that they have rational behaviour
why do we assume consumers have rational behaviour
so we can use models to make assumptions about what customers want
what is demand
the quantity of a good or service that consumers are willing to buy at any given price in a given period of time
what factors influence demand
the price of the good
the price of other goods
your income
preferences
how does the price of the good influence demand
it affects the quantity of it that you chose to buy
how does the price of other goods influence demand
if your product is more expensive demand may decrease
how does your income influence demand
will determine how much of the good you can afford to purchase
what are preferences when referring to influencing demand
an other factors that influence demand are classified as this
what does a customer acting rationally mean
they take the best decisions to make the best result possible
what is marginal utility
the additional utility gained from consuming an extra unit of good
what is market demand
the total quantity of a good or a service that potential buyers are willing to and able to buy at any given time
