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Summary Alevel Economics A Theme 1.2
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In depth summarised notes of theme 1 notes- 1.2.
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EconomicsAnnabelle Styles
, 1.2.1
Behavioural economics
When making economic decisions, consumers aim to maximise their utility and firms
aim to maximise profits.
A consumer’s utility is the total satisfaction received from consuming a good or service
, 1.2.2
Demand is the number of buyers that are willing and able to purchase at any given price
P SHIFTS IN DEMAND
PIRATES affects demand
Population
Income
Related goods
Pe
I
Advertisement
Tastes
Expectations D3
Seasonal goods
D2 D
Q2 Qe Q3 Q
DMU (diminishing marginal utility) explains the downward slope of the demand curve.
DMU states the satisfaction derived from the consumption of an additional unit of a
good will decrease as more of a good is consumed.
Law of demand
I
Demand Supply Effect
Low High Prices fall
High Low Prices rise
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