1.1.9

Question 1

Profit maximisation

Answer 1

Firms want to:

Maximise revenue in long-term through short-term aggressive pricing and advertising

Give consumers what they want at a competitive price

Minimise costs:

Obtain maximum production from minimal resources

Question 2

Government Incentives and disincentives

Answer 2

Incentives:

• Payment of subsides
• Offer tax rebates

Disincentives:

• Indirect and direct taxes
• Regulations etc.

Question 3

Effect on business

Answer 3

Increase business production and minimise costs

Question 4

Subsidies

Answer 4

Increases business production and minimises costs by providing financial relief

Question 5

Tax rebates for businesses

Answer 5

Reducing taxes also helps

Question 6

Disincentives as direct taxes

Answer 6

Without additional tax cuts this discourages business expansion for Australia at a competitive disadvantage

Question 7

Indirect taxes

Answer 7

Causes cost of production to increase to discourage production of unhealthy products that do not maximise society’s wellbeing

Question 8

Government regulations

Answer 8

Regulations apply to businesses to discourage their production of unhealthy products