Specification point 3.2.1 · Theme 3
Business objectives · Business behaviour and the labour market
Questions tagged to this specification point
10 questions
Long-form evaluation and discussion
Evaluate the possible consequences for business decision making of increased market concentration. Refer to industries of your choice in your answer.
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‘Revenue maximisation is a more realistic business objective than profit maximisation for many businesses.’ To what extent do you agree with this statement? Refer to an industry of your choice in your answer.
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Questions built around exam extracts
Case study · UK branded coffee shop chains market
Profit maximisation is assumed to be the business objective of most firms. With reference to Extract A, assess whether this is the case for coffee shop owners.
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Case study · The travel and tourism industry
With reference to Extract C, assess whether Thomas Cook’s failure was caused by the principal-agent problem.
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Focused calculations, explanations and diagrams
Calculate the change in total supernormal profit if the restaurant changes its objective from revenue maximisation to profit maximisation. You are advised to show your working.
Draw a cost and revenue diagram to illustrate the different business objectives: profit maximisation and revenue maximisation.
Diagram needed. Open the original question paper for the diagram
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Calculate the change in total supernormal profit if Emily changes her objective from profit maximisation to revenue maximisation. You are advised to show your working.
Quick checks of economic understanding
If Peloton changes its objective to sales maximisation, then without making a loss, it operates at an output where:
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Which one of the following conditions is necessary for revenue maximisation to occur?
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Emily now decides to change her objective from revenue maximisation to sales maximisation. This change will lead to: