Motives of the firm
- Created by: Niclamb123
- Created on: 31-03-16 12:32
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- Motives of the firm
- Profit maximisation
- Supernormal profits at their greatest
- MC=MR
- Marginal cost must be rising
- Revenue maximisation
- Firm seeks to maximise revenue
- Willing to sell until last unit sold adds nothing to TR
- When MR is positive, it continues to add to TR
- When MR passes 0, and becomes negative, TR starts to decline.
- MR=0
- Sales maximisation
- When a firm attempts to sell as much as possible without making a loss
- AC=AR
- To gain market share
- Drive out competition
- Satisficing
- Making just enough profit to keep stakeholders happy
- Allows for other motives
- Pricing strategies
- Predatory pricing
- Pricing below costs to drive out competiton
- Limit pricing
- Pricing at a level low enough to discourage new firms to enter
- Predatory pricing
- Non-pricing strategies
- Marketing/ad-vertising
- Mergers
- Investment in branding
- Untitled
- Customer service
- Product development
- Quality
- Innovation
- Profit maximisation
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