Business Objectives Flashcards
1
Q
Profit Maximisation
A
MC = MR
2
Q
When does profit increase
A
MR>MC
3
Q
When does profit decrease
A
MC>MR
4
Q
Why do some firms chose to profit maximise?
A
Greater wages and dividends for entrepreneurs
Retained profits are a cheap source of finance, no need for loans (high interest)
5
Q
Revenue maximisation
A
MR=0
6
Q
Sales Maximisation
A
AC=AR
7
Q
Why might a firm sales maximise?
A
The firms aims to sell as much of their goods as possible without making a loss. Amazon did this with kindle so that in the long run they can gain more profits with their new large market share
8
Q
What is profit satisficing?
A
When a firm is earning just enough profits to keep its shareholders happy
