3.2 - Business objectives

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Microeconomics

A-Level Economics

Edexcel

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5 Terms

1
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Profit maximisation

MC=MR

  • WHY -

    • Reinvestment

    • Dividends for shareholders

    • Reward for enterprise

  • But

    • Knowledge of MC=MR hard

    • Expense of stakeholders

    • Greater scrutiny

    • Other objectives more appropriate

2
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Revenue Maximisation

MR=0

  • WHY -

    • EOS

    • Limit pricing

    • P-A-P

3
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Sales Maximisation

AC=AR

  • Why

    • EOS

    • Predatory pricing

    • P-A-P

  • E.g Spotify, Netflix - to max market share

4
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Profit Satisficing

  • makes enough to keep shareholders happy

5
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