Theme 3.2 Business Objectives Flashcards
How do you show profit maximisation on a diagram?
Where MR=MC, this gives you the price Pp and quantity Qp
How do you show revenue maximisation on a diagram?
Where MR=0, this gives you price Pr and quantity Qr
How do you show sales maximisation on a diagram?
Where AR=AC, this gives you the price Ps and quantity Qs
Name the 3 business objectives students are required to show diagrammatically.
Profit, Revenue and Sales Maximisation
What will the assumption of rationality cause shareholders to seek?
Being able to maximise utility by maximising profit
What do Keynesian economists believe about business objectives?
Firms will try to maximise their long-run rather than short-run profits.
What is satisficing?
When a business is making enough money to keep shareholders happy or its sufficient enough for the investors to maintain confidence in the management they appoint.
