Business Objectives 0.0 / 5 ? EconomicsMonopolyA2/A-levelEdexcel Created by: lysette-ashmoreCreated on: 15-11-17 12:09 Define normal profits The return needed for the firm to stay in the market in the long run 1 of 17 Define abnormal profits Profits above normal profits 2 of 17 What is condition for profit maximisation MR=MC 3 of 17 Define corporate social responsibility Actions that a firm takes in order to demonstrate its commitment to behaving in the public intrest 4 of 17 Define stakeholders A group of people with an interest in the activity and actions of a business eg managers, employees, local community 5 of 17 What is the principal agent problem Arises between conflcits between the objectives of the shareholders (principals) and their managers (agents) who make decisions on their behalf 6 of 17 What is the three possible conditions for sales revenue maximisation MR=0, AR=AC or TR=TC 7 of 17 What is the conditions for normal profit AR=AC 8 of 17 How can you tell if a firm is making abnormal profit When AR>AC 9 of 17 How can you tell if a firm is making a loss When AR 10 of 17 How can you tell if a firm is making normal profit Whem AR=AC 11 of 17 Define satisfying behavior Where the managers of firms aim to produce satisfactory results in terms of profit, rather than trying to maximise them 12 of 17 What is utility maximisation Where managers set out to maximise their own benefit 13 of 17 What is x-efficiency When a firm is not operating at the minimum average cost because of organisational slack 14 of 17 What makes up economic efficiency Productive efficiency & allocative efficiency 15 of 17 What makes up productive efficiency Technical efficiency & cost efficiency 16 of 17 What is the condition for allocative efficiency Where MSB=MSC 17 of 17
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