1.1.2 Economic assumptions

a) The underlying assumptions are that:

• Consumers aim to maximise their benefit

• Businesses aim to maximise their profit.

b) Reasons why consumers may not maximise their benefit:

• Consumers are not always good at calculating their benefits

• Consumers have habits that are hard to give up

• Consumers sometimes copy others’ behaviour.

c) Reasons why producers may not maximise their profit:

• Producers may have managers that revenue maximise or sales maximise

• Producers may prioritise caring for customers

• Producers may complete charitable work.