alternative objectives of firms

Question 1

when do firms practice sales revenue maximisation?

Answer 1

• during a situation when the firm’s cash flow is very tight, such as a recession or during economic downturn

Question 2

why do firms practice revenue maximisation?

Answer 2

• during a recession, if the good in question is a normal good, the demand for it will be low, causing the firms’ revenues to be reduced
• firms that face cash flow difficulties may adopt a pricing strategy that is more consistent with revenue maximisation in the SR to increase the TR they receive, instead of maintaining a price strategy that is more consistent with π maximisation

Question 3

when do firms practice sales maximisation?

Answer 3

• new entrants into a market
• incumbent firms