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Edexcel A-Level Economics AS 1.3.2 1b Reasons Why Consumers May Not Aim to Maximise Utility the Influence of Other Questions

Practise distinguishing herding, habit, inertia and information gaps, then evaluate why switching decisions may not maximise consumer utility.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • distinguish herding, habit and inertia by applying each concept to switching decisions and data
  • evaluate irrational choice using information gaps, poor computation, framing, contracts and costs
  • assess information, comparison tools, incentives or regulation as ways to support rational decisions

Edexcel A-Level Economics AS 1.3.2 1b Reasons Why Consumers May Not Aim to Maximise Utility the Influence of Other Questions question 1

[Maximum number: 4]

In the USA 96 million consumers have never switched banks. 39% of consumers had accounts at the same bank as their parents. 13\% of consumers said that the process of switching involved too much time and effort.

With reference to switching banks, explain the difference between 'herding' and 'inertia'.

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