3.2 Business objectives

Question 1

Name 4 possible business objectives

Answer 1

Profit maximisation
Revenue maximisation
Sales maximisation
Satisficing

Question 2

What is the point of:

a. profit maximisation
b. revenue maximisation

Answer 2

a. MC = MR
b. MR =0

Question 3

Name 2 scenarios where revenue maximisation may be an objective for a firm

Answer 3

• If the firm has to dispose all stock
• Managers who may be paid based on how much is sold

Question 4

Name a scenario where sales maximisation may be pursued by a firm

Answer 4

Avoid attention of competition authorities

Question 5

Define satisficing

Answer 5

Making enough profit to keep shareholders happy but not aim for maximisation