Economic Assumptions (Edexcel IGCSE Economics): Exam Questions

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.

Which one of the following is a reason why consumers may not maximise their benefit?

Spice Cottage is a new food producing business. Its prices are lower than market research suggests consumers would be willing to pay.

Explain one reason why Spice Cottage may not aim to maximise its profit.

For a number of years there has been an increase in obesity in Poland. Consumers of sugary drinks, such as Coca Cola and Fanta, now have to pay an additional 0.50 zloty ($0.11) per litre, following the introduction of a sugar tax. At the same time, there has been an increase in adverts for soft drinks. However, consumers are still buying these drinks even though they are now more expensive.

(Source adapted from: https://retailmarketexperts.com/en/news/2021-retail-tax-and-sugar- (opens in a new tab)tax-come-into-force/)

With reference to the data above and your knowledge of economics, analyse the reasons why consumers may not maximise their benefit when consuming sugary drinks.

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

Andreas is a plumber. Unlike his competitors, he is prepared to work at the weekend. However, he charges customers 50% more for his services at the weekend.

Which one of the following describes this economic assumption?

Which one of the following is a reason why firms may not always maximise their profit?

McAfee is a US-based global computer software security company. In 2017, its revenue was over $2.5bn. The company operates a ‘fundraising match programme’. This means when one of its 7,600 employees participates in a fundraising activity, such as a walk, run or cycle event, the company will contribute an equal amount. For every $1 raised for charity by an employee, the company will also contribute $1 to the charity, up to a maximum of $1 000 per person.

(Source adapted from: https://doublethedonation.com/ (opens in a new tab)tips/companies-that-donate-to-nonprofits/#match)

With reference to the data above and your knowledge of economics, analyse the possible reasons why McAfee chooses not to profit maximise but instead operates the fundraising match programme.

Define the term consumer.

There are many health warnings about the dangers of eating too much sugar but some consumers continue to do so.

Explain one reason why consumers may still make this decision.

Which one of the following is a reason why consumers may not maximise their benefit?