Critique of the maximising behaviour of consumers and producers (HL)

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Last updated 3:04 AM on 9/13/26
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5 Terms

1
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bounded rationality

It refers to the idea that individuals attempt to make rational choices, but their decision-making is constrained by limited cognitive capacity, incomplete information, and time constraints.

2
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Market share

The percentage of a market that a firm controls

3
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rational consumer choice

The assumption is that consumers make decisions to maximize their utility (satisfaction) within their limited income and available choices.

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Three assumptions of rational consumer choices

  1. Utility maximization

  2. Perfect information

  3. Consumer rationality


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Perfect information

Consumers can access to complete and accurate information about prices, products and market conditions