Objectives of the firm

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  • Objectives of firms
    • Profit maximisation
      • MC=MR
        • SNP maximised
    • Revenue maximisation
      • MR=0
        • increases market share
          • drive rivals out of industry
        • last unit sold adds nothing to TR
    • Sales maximisation
      • AC=AR
        • only normal profit is made
          • increases market share
          • discourage new entrants
          • drive rivals out of industry
    • Satisficing
      • making just enough profit to satisfy stakeholders
    • Allocative efficiency
      • P(AR)=MC
        • promoted by government
      • welfare maximisations
      • price charged for the last unit is equal to the cost of making the last unit
    • Productive efficiency
      • AC=MC
        • Untitled


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