2.4 Critique of the maximizing behaviour of consumers and producers (HL only) Notes

Rational Consumer Choice

The theory that consumers make decisions to maximize their own satisfaction or utility.

Behavioral Economics

A field of economics that examines how psychological, social, and emotional factors influence economic decision-making.

Business Objectives

The specific goals or targets that a business aims to achieve, guiding its strategies and decision-making processes.

Utility Maximization

The concept that consumers aim to make choices that provide them with the highest level of satisfaction.

Profit Maximization

The traditional assumption that firms aim to achieve the highest possible profit.

Corporate Social Responsibility

A business model that helps a company be socially accountable to itself, its stakeholders, and the public.

Market Share

The portion of a market controlled by a particular company or product.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution.

Psychological Factors

Influences on consumer decisions that stem from individual mental states and emotions.

Rational Decision-Maker

An idealized concept suggesting that people make decisions by logically weighing options to achieve maximum benefit.