Ch37 Differing objectives and pricing of firms

Front

What is profit maximisation?

Back

The traditional objective of firms, achieved when the difference between total revenue and total cost is greatest.

Front

What is the short-term objective of survival for firms?

Back

A situation where losses are minimised.

Front

What does profit satisficing mean?

Back

When a firm makes a reasonable or minimum level of profit to satisfy its shareholders or stakeholders.

Front

What is a sales maximisation objective?

Back

When the physical volume of products sold is maximised.

Front

What is a revenue maximisation objective?

Back

Where the firm aims to maximise its total revenue from sales.

Front

What is price discrimination?

Back

Practised by monopolists, it is when the same product is sold at different prices to different market segments without cost justification.

Front

What is limit pricing?

Back

When a firm sets a lower short-run price to deter new firms from entering a market.

Front

What is predatory pricing?

Back

When an established firm sets low prices to force existing firm out of a market.

Front

What is price leadership?

Back

A common feature of oligopolies where all firms accept the price set by the leading firm.

Front

What are the three forms of price discrimination?

Back

First degree: charge each customer a different price; Second degree: offer discounts based on purchase amount; Third degree: charge premium prices to certain customers.