3.2.1 Flashcards
1
Q
What are 4 business objectives?
A
profit maximisation
revenue maximisation
sales maximisation
profit satisficing
2
Q
Why might firms want to profit maximise?
A
Benefit Shareholders by increasing dividends
3
Q
How would you show profit max on diagram?
A
MC=MR
4
Q
What is supernormal profits?
A
Occurs when Total profit > Total revenue
5
Q
Why might firms revenue maximise?
A
To benefit from economies of scale.
6
Q
Where can you find revenue maximisation?
A
MR=0
7
Q
Where does sale maximization occur?
A
AC=AR
8
Q
Why might we use sales maximization?
A
In sort-term to clear all stock.
9
Q
What is satisficing?
A
Business settles at operating at an amount that is in between sales maximization and profit maximization.
