3.2.1 Flashcards
1
Q
Profit max
A
MR=MC
2
Q
Rev max
A
MR=0
This is where TR is maxed
- Typically tend to offer lower prices
3
Q
Why might firms rev max
A
- Due to the principle agent problem
- Managers control businesses
- Managers get paid through sells bonuses
- To maintain market power which will help them take over the market
-To compete with other business in a competeive market
4
Q
Sales max
A
-
selling as much as possible without making a loss (eprttution)
AR = AC - Normal profits at this point
- Highest point which they can produce at where they have subnormal profits
5
Q
Why do firm choose sales rev
A
6
Q
What is saticficing
A
-Move away from moving away of maximising
- Doing the bare minimum so they just perform at a satisfactory levels where every one is happy.
7
Q
Why might business profit max
A
- Reinvestment fir R&D
- Dividend for shareholders
- Reward for entrepreneurship
8
Q
A
9
Q
A
10
Q
A
11
Q
A
12
Q
A
13
Q
A
14
Q
A
