1.1 Scarcity, choice and potential conflicts
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14 Terms
What îs the basic economic problem
Resources are finite and needs/wants are infinite, so resources must be used optimally
Scarcity
When there îs a shortage of resources in relation to the quantity of needs/wants
Opportunity cost
The value of the next best alternative foregone
Business objectives
Profit maximising
Sales maximising
Survival
Market share maximising
Customer satisfaction
What îs profit satisficing
When a firm earns just enough profits to keep the shareholders happ
Equation for profit maximising
Marginal cost= marginal revenue
Equation for sales maximising
Average cost = average revenue
What îs corporate social responsibility
Where firms take responsibility for their actions that harm the environment, and aim to maximise social welfare
State stakeholders
Shareholders
Employees
Consumers
Managers
Government
Suppliers
Principal-agent problem
How the agent (who makes decisions for the principal) acts in their own best interest as opposed to the principal
Note 
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