Business objectives Flashcards
1
Q
Why profit max
A
- Reinvestment
- Dividends
- Lowers costs and prices
2
Q
Why not profit max
A
- Scrutiny from CMA
- Lack of knowledge of MC=MR
3
Q
Why rev max
A
- Eco of scale
- Pred pricing
- Principal agent problem- it’s easier
4
Q
Why sales max
A
- Eco of scale
- Limit pricing
- Principal agent problem
5
Q
Other objectives
A
- Profit satisficing
- P=MC
- Cooperate social responsibility
