Objectives of Firms (AQA A-Level Economics): Flashcards
📚Flashcards
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Practise the cards
10 cards from this deck
Profit maximisation rule
Profit maximisation rule
MR = MC
Total profit formula
Total profit formula
Total revenue - Total cost
Action when MR > MC
Action when MR > MC
Produce more output
Action when MR < MC
Action when MR < MC
Reduce output
Market structures where MR = MC applies
Market structures where MR = MC applies
All market structures
Divorce of ownership from control
Divorce of ownership from control
Owners & managers are different groups with different goals
Principal-agent problem
Principal-agent problem
Managers pursue own interests, not shareholders' interests
Sales revenue maximisation condition
Sales revenue maximisation condition
MR = 0
Revenue max vs profit max output
Revenue max vs profit max output
Revenue max output > profit max output
Satisficing
Satisficing
Achieving satisfactory outcome, not best possible outcome