Theme 3.2: Business Objectives Flashcards
(4 cards)
1
Q
2 reasons why some firms choose to profit maximise?
A
- It provides greater wages and dividends for entrepreneurs.
- Retained profits are a cheap source of finance, which saves paying high interest rates on loans.
2
Q
Why might a firm sales maximise?
A
The firms aims to sell as much of their good and services as possible without making a loss. Amazon did this with kindles as they sold as many as possible to gain market share, so they can earn more profits in the long run.
3
Q
Draw a cost revenue diagram and label where
- Profit maximisation
- Sales maximisation
- Revenue maximisation
A
4
Q
What is profit satisficing?
A
When a firm is earning just enough profits to keep its shareholders happy.
