3.2 business objectives Flashcards
profit maximisation
Firms will seek to attain the highest level of profit available in their production of goods and services
revenue maximisation
Some firms will seek to maximise sales revenue. This will occur at the point where marginal revenue = 0
sales maximisation
selling as much as possible, even if its at a loss, to push out competitors over time. focus is on volume!
satisficing
A level of profit below profit maximisation that satisfies the needs of the owners or managers of an organisation e.g. working less hours to enjoy more leisure time or behaving ethically
profit formula
profit = revenue - cost
total revenue is
price * quantity sold
total cost is
fixed cost + variable cost
profit maximisation is where
MC = MR
marginal cost is
the cost of producing one more unit
marginal revenue is
the revenue recieved from selling one more unit
revenue maximisation is where
MR = 0
sales maximisation is where
AR = AC
