Objectives of firms Flashcards
1
Q
5 economics objectives of firms
A
Profit maximisation Revenue maximisation Long run profit maximisation Social/ environmental concerns Co-operatives
2
Q
Allocative efficiency
A
MC=AR
3
Q
Profit maximisation
A
MC=MR
4
Q
Productive efficiency
A
Lowest point of ATC
5
Q
Principle agent problem
A
Owners of a private company have a board of directors which control the day to day running of the business. As these directors are awarded by wage while shareholders are rewarded by profit the objectives differ
6
Q
(3) PAP solutions
A
Employee store ownership schemes
Long term contracts
Stock commitment (Apple CEO’s own 3’s income in stocks)
