Edexcel A Level Economics A
Edexcel A Level Economics A Business Objectives and Behaviour Exam Questions
Free Edexcel A Level Economics A exam questions on 3.2 Business Objectives, with mark schemes. Covers profit maximisation, revenue and sales maximisation and satisficing.
Business Objectives and Behaviour exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
StemUp mark scheme flashcards
Edexcel A Level Economics A 9EC0 Flashcards (Anki & Quizlet)
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Use them on Anki or Quizlet, then test yourself with the questions on this page.
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About Edexcel A Level Economics A Business Objectives and Behaviour
3.2 is about what firms are trying to achieve and how that changes their price and output decisions. Diagram questions ask you to locate the output for each objective.
What you need to know
- Profit maximisation Where marginal cost equals marginal revenue (MC = MR).
- Revenue maximisation Where marginal revenue equals zero (MR = 0).
- Sales maximisation Where average cost equals average revenue (AC = AR), the highest output without making a loss.
- Satisficing Making enough profit to keep shareholders happy while pursuing other goals, often linked to the principal-agent problem and the divorce of ownership and control.
Common mistakes in Business Objectives and Behaviour
- Placing revenue maximisation at MC = MR instead of MR = 0.
- Placing sales maximisation where AR crosses MC.
- Assuming every firm aims to maximise profit.
- Not explaining why managers may prefer revenue growth (pay, status).
Try three Business Objectives and Behaviour exam-style questions
1. State the profit maximising condition. (1 mark)
Show the mark scheme answer
Marginal cost equals marginal revenue (MC = MR).
2. State the condition for revenue maximisation. (1 mark)
Show the mark scheme answer
Marginal revenue equals zero (MR = 0).
3. Explain why a firm might satisfice rather than profit maximise. (3 marks)
Show the mark scheme answer
Ownership is separated from control (1), so managers may pursue their own aims such as size or status (1) while earning just enough profit to keep shareholders content (1).
Business Objectives and Behaviour FAQs
What does Edexcel A Level Economics 3.2 cover?
Business objectives: profit maximisation, revenue maximisation, sales maximisation and satisficing, and why firms choose them.
Do I need to show objectives on a diagram?
Yes. Be ready to mark MC = MR, MR = 0 and AC = AR on a cost and revenue diagram.
How does 3.2 link to the principal-agent problem?
Managers may not share owners' aim of profit maximisation, which explains revenue maximisation and satisficing.
Revise this topic with flashcards: Edexcel A Level Economics A 9EC0 Flashcards, with mark scheme answers for Anki and Quizlet.
