1
Q
What are the underlying assumptions of rational economic decision making?
A
- Firms aim to maximise profits
> keeps shareholders
satisfied - Consumers aim to maximise utility
> utility is the satisfaction
gained from consuming
a product
Economics - Theme 1
flashcards
Decks in class (22)
# Cards
-
1.1 - Economics as a social science15
-
1.1 - Positive and Normative statements9
-
1.1 - The economic problem12
-
1.1 - Production possibility frontiers16
-
1.1 - Specialisation and the division of labour12
-
1.1 - Free market economies, mixed economy, command economy16
-
1.2 - Rational decision making1
-
1.2 - Demand8
-
1.2 - Price, income, cross elasticities of demand28
-
1.2 - Supply5
-
1.2 - Elasticity of supply11
-
1.2 - Price determination5
-
1.2 - Price mechanism4
-
1.2 - Consumer and producer surplus7
-
1.2 - Alternative views of consumer behaviour5
-
1.2 - Indirect taxes and subsidies10
-
1.3 - Types of market failure18
-
1.3 - Externalities20
-
1.3 - Public goods7
-
1.3 - Information gaps7
-
1.3 - Government intervention in markets27
-
1.3 - Government failure14
