2. Business Objectives Flashcards
Why do firms profit maximise
-maximise owners returns
-generate funds for investment
-help them survive a slowdown during recession
Where does profit maximisation happen on a graph
Where MC=MR
Why do some firms revenue maximise
-managers salaries can be based off of revenue
-some profit is still provided for owners
-managers may gain managerial awards
Where does revenue maximisation occur on a graph
When MR=0
What is sales maximisation
Where managers aim to maximise growth of the firm
Why would firms sales maximise
-increase market share
-push other firms out of the industry
-it’s often easier to judge a firm on growth over profit
Where does sales maximisation occur on a graph
Where AC=AR
What is satisficing
When managers generate enough profit to please the owners, whilst being able to benefit themselves
(Could increase their own salary which increases costs and therefore isn’t profit maximising)
