3.2 - Business Objectives

Question 1

What are the 4 business objectives

Answer 1

Profit max
Revenue max
Sales max
Satisficing

Question 2

How can profit be used 3

Answer 2

Pay dividends to shareholders
Save money
Invest for future (R&D)

Question 3

What is the profit max point

Answer 3

MR = MC

Question 4

What is the revenue max point

Answer 4

MR = 0

Question 5

What is satisficing

Answer 5

Reaching a minimum requirement to keep shareholders happy
e.g. profit, sales, revenue goals

Question 6

What do firms maximise to gain market share

Answer 6

Sales

Question 7

What is the sales max point

Answer 7

AR = AC

Question 8

Describe the curves on a cost / revenue against quantity curve

Answer 8

MR and AR downwards sloping with MR twice the gradient of AR and reaching 0
AC forming a symmetrical U with its min point cutting MC
MC starting below AC and dipping before going up through min AC

Question 9

What point is normal profits

Answer 9

AC = AR (sales max)

Question 10

What is the problem with sales and revenue maxing

Answer 10

It necessitates a fall in price which other firms can copy meaning no increase in objective