ECONOMIC

ASSUMPTIONS

Y10 A – Ms. Naduni

RATIONAL BEHAVIOUR

Consumers aim to
maximise benefit
Rational behaviour
Businesses aim to
maximise their profit
CONSUMERS BENEFIT
Three products with Consumers select the
the same quality cheapest option

Brand A Brand B Brand C

Price $3.2 Price $3.5 Price $3.0
CONSUMERS BENEFIT
Two products with the Consumers select the
same price best quality option

Petrol 92 Petrol 95
Price $100 Price $100
BUSINESSES BENEFIT
Two suppliers with the Businesses select the
same quality cheapest option

Supplier A Supplier B
Price $50 Price $52
BUSINESSES BENEFIT
Two pricing options for Businesses charge the
the same product highest price

Charge a price
of $5

Charge a price
of $3
IRRATIONAL BEHAVIOUR - CONSUMERS

Consumers might have difficulty in calculating the benefits

from consumption.
• Overestimation or underestimation of benefits

Habitual behaviour

• Brand loyalty

Influenced by behaviour by others

• Family and friends

IRRATIONAL BEHAVIOUR - PRODUCERS

Performance of
Alternative
businesses can Not-for-profit
business
be influenced organisations
objectives
by other people

Social
enterprises
INFORMATION FAILURE

Consumers and Flow of information

producers might have increased
not have access to due too internet
all information. and social media.