3.2

• What is the requirement for profit maximisation?

  MC = MR
• What is the requirement for revenue maximisation?

  MR = 0
• What is the requirement of sales maximisation?

  AR = AC
• What is the requirement of sales satisficing

  Making enough profit to keep shareholders happy
• When is it a firm is likely to profit maximise

  • In a competitive market, as it requires innovation which needs profits
  • In a monopoly, as it has no competition or any other factor to worry about
  • To loss minimise
  • Due to pressure from shareholders
• When is it a firm is likely to revenue maximise

  • Some forms require cash to prioritise revenue
  • May be off loading excess stock
  • Large firms face agent principle problem eg. shareholders want profit but managers want revenue as they are paid by this
• When is it a firm is likely to sales maximise

  • To increase market shares/power
  • used as a part of limit pricing
• When is it a firm is likely to profit satisfice

  Public limited companies may face principle agent problem