Business Objectives

Question 1

Profit Maximising

Answer 1

When firms aim to increase profits so they profit maximise

MC=MR

Firms make an additional profit from selling an additional unit

Shareholders will want to do this to increase their shares

Question 2

Revenue Maximising

Answer 2

When firms want to maximise revenue

MR=0

If MR=0 then total revenue has reached its maximum so revenue is maximised

Directors and Managers are interested in doing this to increase market share and thus their reputation.

Question 3

Sales Maximising

Answer 3

When firms maximise their sales

AR=AC

Here they make normal profit, they maximise their sales without making a loss.

Directors and Managers will want to do this to increase their bonuses.

Question 4

Profit Satisficing

Answer 4

When Companies make enough profit to satisfy its influencers, shareholders and workers, but also satisfy their own personal, social and environmental objectives.

Question 5

Influencers on Firms

Answer 5

Shareholders- hold shares in the company, meaning they own a percentage of it

Directors and Managers- the people who run the business, supervising employees, managing stocks and marketing.

Workers- the people who are employed and work for the firm.

Consumers- people who buy the goods or services produced by the firm, and consume them.