Th3.2: Other Aims Flashcards
1
Q
What are the two other aims (i think of satisficing)?
A
managerial utility maximisation
marginal cost pricing / allocative efficiency
2
Q
MUM: What did Oliver Williamson say?
A
that managers will make decisions to maximise their own satisfaction
3
Q
MUM: What will this be dependant on?
A
their salary, the number of staff they control, their power over decision making and the other benefits they receive
4
Q
Marginal cost pricing / allocative efficiency
A
some firms, particularly nationalised industries, aim to maximise social welfare
5
Q
MCP/AE: How will this be done?
A
by producing where the value society places on the good is equal to the extra cost of producing that good i.e MC = AR. this achieves allocative efficiency
