Learning objectives
Explain profit maximisation where MC = MR as the traditional objective of firms and show the profit-maximising output on a diagram
Explain the alternative objectives of survival, profit satisficing, sales maximisation (the largest output at which AR = AC) and revenue maximisation (where MR = 0)
Explain the principal–agent problem that arises when the objectives of managers differ from those of shareholders
Analyse how price elasticity of demand links price changes to a firm's revenue on an ordinary downward-sloping demand curve and on the kinked demand curve of an oligopoly
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