MC=MR. Interests of owners or shareholders. By short-run profit maximising, firms can also generate funds for investment and to help them survive a slowdown during a recession.
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3.2.1 What is revenue maximisation?
MR=0. Managers are most interested in their level of revenue since this is what their salary depends on. firms may aim to revenue maximise as long as they provide some profit for the owners.
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3.2.1 What is sales maximisation?
AR=AC. Managers may aim to maximise the growth of their company above any other objective. Growth will also increase market share, and may push other firms out of business. It will enable a firm to have more market power and more power over prices.
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3.2.1 What is satisficing?
Due to the principal-agent problem, firms will make enough profit to keep owners happy whilst following other objectives
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3.2.1 What are other aims firms may have?
Not-for-profit firms provide some kind of benefit for the public. A firm may support local businesses by using suppliers in their region. A firm may protect the environment by using sustainable resources.
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Other cards in this set
Card 2
Front
3.2.1 What is revenue maximisation?
Back
MR=0. Managers are most interested in their level of revenue since this is what their salary depends on. firms may aim to revenue maximise as long as they provide some profit for the owners.
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