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Edexcel IGCSE Economics 1.1.2 economic assumptions

Practise economic-assumption questions by applying benefit and profit maximisation, then explaining why real choices may differ.

Syllabus
First assessment 2019
Course
Economics 4EC1

Exam points

  • Apply benefit and profit maximisation assumptions to consumer or business choices.
  • Explain why habits, adverts or calculation errors stop consumers maximising benefit.
  • Analyse why firms may choose sales, customer care or charity over maximum profit.

Covered syllabus points

1.1.2.a Consumer-benefit and business-profit assumptions1.1.2.b Why consumers may not maximise benefit1.1.2.c Why producers may not maximise profit

1.1.2 Economic assumptions question 1

[Maximum number: 1]

Which one of the following describes this economic assumption?

A

Businesses aim to maximise their profit

B

Producers may complete charitable work

C

Consumers sometimes copy others' behaviour

D

Governments try to increase the number of days worked

1.1.2 Economic assumptions question 2

[Maximum number: 2]

Describe one reason why consumers do not always maximise their benefit from the consumption of a product.

Figure 2 shows the supply of wheat in a region during 2019.

Figure 2

Figure 2

1.1.2 Economic assumptions question 3

[Maximum number: 6]

Jags owns a café in a small town in Malaysia. During a recent school holiday, she offered a free lunch to each child visiting the café with a paying adult. This was welcomed by customers who have had problems in the last few months due to the rising cost of living.

With reference to the data above and your knowledge of economics, analyse a possible reason why Jags chose not to maximise profit.

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