Edexcel A-Level Economics AS 1.3.2 1a Assumption of Rationality in Decision Making Consumers Aim Decision Making to Maximise Questions

Practise applying rational choice to consumer decisions, especially switching supplier or reducing purchases when prices change.

Exam points

explain rational choice as weighing costs and benefits to maximise consumer utility
apply utility maximisation to switching supplier or buying less after a price rise

[Maximum number: 1]

In April 2020 electricity prices increased on average by 10% in the UK. In the same month, a record number of 668371 consumers switched to cheaper electricity suppliers.

Which one of the following can explain the behaviour of those consumers who switched to cheaper electricity suppliers?

Consumers experienced habitual behaviour

Consumers aimed to maximise their utility

Consumers had poor computational skills

Consumers aimed to minimise their utility

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Edexcel A-Level Economics AS 1.3.2 1a Assumption of Rationality in Decision Making Consumers Aim Decision Making to Maximise Questions question 1