profit maximisation

Question 1

traditional viewpoint of profit maxim

Answer 1

consumers and businesses act for themselves
- consumers aim to maximise utility
- businesses ain to maximise profit

Question 2

profit income?

Answer 2

revenue - cost of production

Question 3

where does profit go?

Answer 3

redistributed to business’ owners or reinvested

Question 4

how to maximise revenue

Answer 4

• produce g/s which are most valued therefore consumers are willing to pay more

Question 5

minimising cost

Answer 5

• cut production cost
• cost for wages, raw materials, equipment, transport and utility
• productivity

Question 6

how to make profit?

Answer 6

• advertising/branding and customer loyalty
• price discrimination
• multi - branding

Question 7

multi - branding

Answer 7

individual companies marketing projects under distinct brand names - increasing number of products int he market

Question 8

price discrimination

Answer 8

meeting diff price points of the market - diff consumers diff costs (students vs pensions)

Question 9

advertising

Answer 9

positioning of products and business location and general promotions (e.g. bread next to Nutella)

Question 10

illegal strategies

Answer 10

• predatory pricing
• cartel conduct

Question 11

predatory pricing

Answer 11

prices at such a low level to damage competitor

Question 12

cartel conduct

Answer 12

• 2 companies agreeing on a price structure and also diving market so they are sheltered

Question 13

evolution of business

Answer 13

• high revenue, low cost
• promoting sustainability, community involvement, gender inequality, innovation and R&D
• Evolving and contemporary business goals (diversity, charity, volunteering etc)