2 - the objective of firms Flashcards

1
Q

when total income or revenue is greater than the total costs

A

profits

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2
Q

what the firm receives for the sale of it’s product

price x number sold

A

total revenue

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3
Q

total revenue ÷ number sold

A

average revenue

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4
Q

the addition to total revenue from the production of an extra product

A

marginal revenue

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5
Q

total revenue minus total costs

A

total profit

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6
Q

the amount required to keep a factor employed in its present activity in the long run

A

normal profit

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7
Q

where a firm chooses a level of output where marginal revenue equals marginal costs

A

profit maximisation

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8
Q

a return above normal profit- a surplus payment

A

supernormal profit

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9
Q

profit below normal which should lead to the firms leaving the industry

A

Sub-normal profit

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10
Q

individual who organises the factors of production in order to make a profit

A

entrepreneur

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11
Q

a firm owned by a group of shareholders whose shares can be traded on the London stock exchange

A

public limited company (plc)

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12
Q

a private enterprise firm incorporated with the register of companies

A

corporation

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13
Q

an individual elected by a company’s shareholders to set corporate policies

A

director

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14
Q

non-monetary benefits like an expensive car provided by the firm

A

perks

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15
Q

financial return from the ownership of shares in a firm

A

dividends

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16
Q

the right to buy or sell stock at an agreed price

A

share options

17
Q

shareholders that will clamour for greater dividends and may mobilise other shareholders to oppose the management

A

activist shareholders

18
Q

a bid to buy shares in an attempt to gain control of the firm which is opposed by the firms directors who fear job loss

A

hostile bid

19
Q

the firm is producing satisfactory but not maximum profit

A

satisficing

20
Q

firms, organisations or individuals with an interest in the firm

A

stakeholders

21
Q

percentage of the total market held by the company

A

market share

22
Q

when a firm has the ability to exert significant influence over the quantity of goods traded or the price at which they are sold

A

market power

23
Q

where all costs and benefits are considered before a decision is taken

A

rational choice theory

24
Q

where firms may be taken over by other firms if they appear to be making lower profits than their assets would suggest

A

capital market discipline

25
Q

refers to the practice of removing the stock of a company from a stock exchange so that investors can no longer trade shares of the stock on that exchange

A

delisting

26
Q

turning invention into commercial use; introducing a new product or process

A

innovation

27
Q

where 2 firms at the same stage of production combine

A

horizontal integration

28
Q

where firms at different stages of production combine

A

vertical integration

29
Q

where firms with no obvious connection combine

A

conglomerate merger

30
Q

a particular type of horizontal merger

A

lateral merger