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6 Cards in this Set
- Front
- Back
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Name objectives of a firm |
1) profit Maximisation. All firms try to achieve supernormal profits. This profit occurs when the total revenue is greater than the total cost and the difference is always positive. This allows firms to invest in R and D, reinvest on expansion 2) profit satisfying objectives: a firm aims at. Making a profit which will keep the shareholders happy 3) survival objective. This occurs when a firm has a profit which only covers the cost of production 4) growth maximisation. A manager will try to achieve economies of scale 5) sales maximisation. A firm will want to increase its market share |
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List government objectives |
1) full employment 2) economic growth 3) price stability 4) BOPS 5) fair distribution of income |
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What’s full employment |
This is a situation in an economy where everyone is willing and able to work can find a job. When this occurs, there is full utilisation of resources, no wastage of resources which lead to maximisation production. In reality, full employment doesn’t mean there is zero un employment, there is always 2% unemployment |
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What is price stability? |
Government aim for price stability because it helps to ensure certainty and build ups firms confidence. 2) It also means it helps households, workers and firm plan do the future. 3)it helps maintain the purchasing power which will help control the cost of living 4) it can also encourage produces to increase output, as they many think higher prices lead to higher profits 5) makes a country’s good more competitive as consumers will be willing to buy them |
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Economic growth |
This is an increase in the Real GDP of a country at given period of time. Government will try achieving economic growth because it will increase income, output and expenditure which will increase investment and other economies activities. It will therefore increase the living standard as there will be better education, health |
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Redistribution of income |
A government may seek to redistribute the income and wealthy by reducing the gap between rich and poor. A government tries to achieve income distribution by use of progressive tastes, which will tax more the rich and use the revenue to provide social services to the poor, such as education |
