L6 Traditional Point of view of Businesses

Question 1

Traditional Point of view of Businesses

Answer 1

The traditional view of a business is that it generally seeks profit maximisation in both the short and especially long-term. ​

​

To do this, firms make decisions that seek to do three main things:​

Meet consumer demand​

Maximise sales revenue ​

Minimise production costs

Question 2

Incentives and Disincentives to Businesses

Answer 2

Governments can also use incentives to affect a business’s cost of production and their profits​

Incentives and disincentives by the Government​

​

Production Subsidies- When the government can provide production subsidies to businesses in order to reduce their costs of production and provide them with additional incentives to produce goods and services. Eg…​

​

Removal of Tariffs- Lowering tariffs is about promoting structural change to economy’s performance over the long run. Removal of tariffs lower the prices of imported goods.​

​

To remain viable in the market, Australia’s import-competing industries are implementing new technology and adapting more efficient work practices. The cost saving can them be oved on to the consumers in form of lower prices.​

Question 3

Incentives and Disincentives to Businesses

Answer 3

Governments can also use incentives to affect a business’s cost of production and their profits​

Incentives and disincentives by the Government​

​

Production Subsidies- When the government can provide production subsidies to businesses in order to reduce their costs of production and provide them with additional incentives to produce goods and services. Eg…​

​

Removal of Tariffs- Lowering tariffs is about promoting structural change to economy’s performance over the long run. Removal of tariffs lower the prices of imported goods.​

​

To remain viable in the market, Australia’s import-competing industries are implementing new technology and adapting more efficient work practices. The cost saving can them be oved on to the consumers in form of lower prices.​

Question 4

Other factors influencing decision making​

Answer 4

The market structure in which firms sell. ​

Government rules, policies and incentives.​

The activities of unions. ​

Reports in the media. ​

General community attitudes.