1.3.2 - Consumer behaviour and demand

The assumption of rationality in decision making: consumers aim decision making to maximise utility by making rational choices; firms aim to maximise profits.

Use a - assumption of rationality in decision making: consumers aim decision making to maximise to connect the rule to the data and decision in the question.

This matters because a - assumption of rationality in decision making: consumers aim decision making to maximise determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - assumption of rationality in decision making: consumers aim decision making to maximise to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - assumption of rationality in decision making: consumers aim decision making to maximise is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Reasons why consumers may not aim to maximise utility:; the influence of other people's behaviour (herding); habitual behaviour; inertia; poor computational skills; the need to feel valued; framing and bias.

Use b - reasons why consumers may not aim to maximise utility: • the influence of other to connect the rule to the data and decision in the question.

This matters because b - reasons why consumers may not aim to maximise utility: • the influence of other determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - reasons why consumers may not aim to maximise utility: • the influence of other to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Reasons why consumers may not aim to maximise utility: • the influence of other is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The concept of 'demand'.

Use a - concept of 'demand' to connect the rule to the data and decision in the question.

This matters because a - concept of 'demand' determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - concept of 'demand' to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - concept of 'demand' is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between movements along a demand curve and shifts of a demand curve.

Use b - distinction between movements along a demand curve and shifts of a demand curve to connect the rule to the data and decision in the question.

This matters because b - distinction between movements along a demand curve and shifts of a demand curve determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - distinction between movements along a demand curve and shifts of a demand curve to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - distinction between movements along a demand curve and shifts of a demand curve is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The concept of diminishing marginal utility and its significance for the shape of the individual demand curve.

Use c - concept of diminishing marginal utility and its significance for the shape of the to connect the rule to the data and decision in the question.

This matters because c - concept of diminishing marginal utility and its significance for the shape of the determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - concept of diminishing marginal utility and its significance for the shape of the to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - concept of diminishing marginal utility and its significance for the shape of the is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Factors that may cause a shift in the demand curve:; changes in the price of substitutes or complementary goods; changes in real income; changes in tastes; changes in size and age distribution of the population; advertising.

Use d - factors that may cause a shift in the demand curve: • changes in the price of to connect the rule to the data and decision in the question.

This matters because d - factors that may cause a shift in the demand curve: • changes in the price of determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply d - factors that may cause a shift in the demand curve: • changes in the price of to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: d - Factors that may cause a shift in the demand curve: • changes in the price of is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The concepts of 'price', 'income' and 'cross-elasticities of cross-elasticities demand'. of demand.

Use a - concepts of 'price', 'income' and 'cross-elasticities of cross-elasticities demand'. of to connect the rule to the data and decision in the question.

This matters because a - concepts of 'price', 'income' and 'cross-elasticities of cross-elasticities demand'. of determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - concepts of 'price', 'income' and 'cross-elasticities of cross-elasticities demand'. of to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - concepts of 'price', 'income' and 'cross-elasticities of cross-elasticities demand'. of is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

How to use formulae to calculate price, income and cross-elasticities of demand.

Use b - use formulae to calculate price, income and cross-elasticities of demand to connect the rule to the data and decision in the question.

This matters because b - use formulae to calculate price, income and cross-elasticities of demand determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - use formulae to calculate price, income and cross-elasticities of demand to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: use the formula and units given in the question, show the substitution and interpret the result; the calculation alone is not the conclusion.

Interpretation of numerical values of price elasticity of demand:; perfectly price elastic demand; price elastic demand; unitary price elastic demand; price inelastic demand; perfectly price inelastic demand.

Use c - interpretation of numerical values of price elasticity of demand: • perfectly price to connect the rule to the data and decision in the question.

This matters because c - interpretation of numerical values of price elasticity of demand: • perfectly price determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - interpretation of numerical values of price elasticity of demand: • perfectly price to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - Interpretation of numerical values of price elasticity of demand: • perfectly price is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The factors influencing price elasticity of demand:; availability of substitutes; branding; percentage of total expenditure; addictiveness of product; durability of product.

Use d - factors influencing price elasticity of demand: • availability of substitutes • to connect the rule to the data and decision in the question.

This matters because d - factors influencing price elasticity of demand: • availability of substitutes • determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply d - factors influencing price elasticity of demand: • availability of substitutes • to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: d - factors influencing price elasticity of demand: • availability of substitutes • is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

How to calculate total revenue.

Use e - calculate total revenue to connect the rule to the data and decision in the question.

This matters because e - calculate total revenue determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply e - calculate total revenue to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: e - calculate total revenue is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

How price elasticity of demand varies along a straight line demand curve.

Use f - price elasticity of demand varies along a straight line demand curve to connect the rule to the data and decision in the question.

This matters because f - price elasticity of demand varies along a straight line demand curve determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply f - price elasticity of demand varies along a straight line demand curve to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: f - price elasticity of demand varies along a straight line demand curve is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The relationship between price elasticity of demand and total cross-elasticities revenue. of demand.

Use g - relationship between price elasticity of demand and total cross-elasticities revenue. to connect the rule to the data and decision in the question.

This matters because g - relationship between price elasticity of demand and total cross-elasticities revenue. determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply g - relationship between price elasticity of demand and total cross-elasticities revenue. to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: g - relationship between price elasticity of demand and total cross-elasticities revenue. is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Interpretation of numerical values of income elasticity of (continued) demand:; perfectly income elastic demand; income elastic demand; income inelastic demand; perfectly income inelastic demand; the distinction between normal goods and inferior goods.

Use h - interpretation of numerical values of income elasticity of (continued) demand: • to connect the rule to the data and decision in the question.

This matters because h - interpretation of numerical values of income elasticity of (continued) demand: • determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply h - interpretation of numerical values of income elasticity of (continued) demand: • to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: h - Interpretation of numerical values of income elasticity of (continued) demand: • is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Interpretation of numerical values of cross elasticity of demand. Significance for the degree to which goods are:; substitutes; complements; unrelated.

Use i - interpretation of numerical values of cross elasticity of demand. significance for the to connect the rule to the data and decision in the question.

This matters because i - interpretation of numerical values of cross elasticity of demand. significance for the determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply i - interpretation of numerical values of cross elasticity of demand. significance for the to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: i - Interpretation of numerical values of cross elasticity of demand. Significance for the is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The significance of price, income and cross-elasticities of demand for firms, consumers and the government.

Use j - significance of price, income and cross-elasticities of demand for firms, consumers and to connect the rule to the data and decision in the question.

This matters because j - significance of price, income and cross-elasticities of demand for firms, consumers and determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply j - significance of price, income and cross-elasticities of demand for firms, consumers and to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: j - significance of price, income and cross-elasticities of demand for firms, consumers and is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.