IAL Economics Unit 3 Business Objectives

Emily now decides to change her objective from revenue maximisation to sales maximisation. This change will lead to:

• a decrease in the number of customers

• a decrease in the price of treatments

• an increase in productive efficiency

• an increase in the level of profit

A firm facing a downward sloping demand curve changes its pricing policy from revenue maximising to profit maximising. Which of the following shows the effect on the equilibrium price and output?

• A rise rise

• B rise fall

• C unchanged fall

• D fall rise

• E fall fall

When a firm facing a downward sloping demand curve changes its pricing policy from revenue maximising to profit maximising, what happens to the equilibrium price and output?

• The equilibrium price rises and output falls.

• The equilibrium price falls and output rises.

• Both equilibrium price and output rise.

• Both equilibrium price and output fall.

The management at a famous football club aim to promote the firm’s success in matches as their primary objective. The firm’s shareholders indicate at a meeting that they will accept low dividends on their shares on the condition that the club invests in new players. This indicates that the

• management is aiming for short-term gains in share prices

• management is profit satisficing

• management is profit maximising in the short run

• firm cannot make supernormal profits in the long run

• average variable cost of players is equal to the marginal revenue gained from their employment

A firm with monopoly power decreases the price of its product to increase its market share up to the output at which it just earns normal profit. Which of the following is the best description of the firm’s objective?

• Profit maximisation in the short run

• Increased market contestability

• Revenue maximisation in the long run

• Sales maximisation

• Loss minimisation

A firm with monopoly power decreases the price of its product to increase its market share up to the output at which it just earns normal profit. Which of the following is the best description of the firm’s objective?

• Maximizing market share while earning normal profit

• Maximizing total revenue regardless of profit

• Minimizing production costs

• Maximizing abnormal profit

At the end of a day's trading a flower seller cuts the prices of all the stock that has reached its 'sell by' date. This pricing strategy is most likely to be:

• fixed cost pricing

• limit pricing

• revenue maximisation pricing

• predatory pricing

• productive efficiency pricing.

A firm engaged in 'satisficing' behaviour is most likely to:

• maximise profits

• maximise revenue

• maximise sales

• minimise costs

• produce at an output different to that of a profit maximising firm.

A firm might aim to maximise sales rather than profits in the short run because:

• it wants to increase its market share or establish itself in the market.

• it wants to reduce its costs immediately.

• it is required by law to do so.

• it wants to avoid paying taxes.

What was the market share percentage of Jet2 in 2019?

• 16%

• 10%

• 22%

• 5%