THEME 1

Question 1

benfits of profit maximisation?

Answer 1

• provides greater wages and dividance for shareholders
• retained profits are a cheap source of finance, saves paying intrest rates on loans
• in short run, intrests of owners and shareholders are the most importent as they aim to maximise their gain from the comapny
• in long run, consumers do not like rapid price changes so this will provide a stable price and output

Question 2

profit maximisation

Answer 2

marginal revinue = marginal cost

Question 3

benfits of sales maximisation?

Answer 3

• increaces market share, which increaces manpoly power and gives the firm more price control allowing for more long term profit
• can force competitors out of the market

Question 4

negative impacts of creative destruction

Answer 4

• job losses due to automation
• failure of businesses

Question 5

difine entrepreneur

Answer 5

• an individual that orgonises busienss venture and is resoposible for the risks
• controls the four factors of production
• obtains the starting finance

Question 6

postive impacts of creative destruction

Answer 6

• development of new products
• improvements in efficancy and productivity = lower cost of production
• quality and quantity of goods and services improve
• rise in living standards due to inovation