Lesson 3.1.1

3.1.1 Maximisation objectives of firms Quiz: OCR Economics, Unit 3

20 questions

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Lesson 3.1.1, Maximisation objectives of firms: 20 multiple choice questions for the OCR Economics (H460), Unit 3: Business objectives, written with Revision Ninja.

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The 20 questions

  1. What output level maximises total profit for a firm?

    • AC = AR
    • MC = AC
    • MR = 0
    • MC = MR

  2. What output level maximises total revenue for a firm?

    • AC = AR
    • AR = 0
    • MC = MR
    • MR = 0

  3. What output level maximises sales volume without making a loss?

    • MC = AC
    • MC = MR
    • AC = AR
    • MR = 0

  4. What is achieved when a firm operates at the minimum point of its average cost curve?

    • Allocative efficiency
    • Dynamic efficiency
    • Productive efficiency
    • Profit maximisation

  5. Which objective occurs when managers set satisfactory rather than maximum profit targets?

    • Cost minimisation
    • Profit satisficing
    • Revenue maximisation
    • Sales maximisation

  6. Which condition must be met for a firm to achieve allocative efficiency?

    • MR = MC
    • P = MC
    • MR = 0
    • P = AC

  7. Which business objective prioritises expanding market share over immediate maximum profits?

    • Cost minimisation
    • Profit maximisation
    • Profit satisficing
    • Growth maximisation

  8. If marginal revenue is £10 and marginal cost is £6, what should the firm do?

    • Decrease output
    • Keep output constant
    • Shut down immediately
    • Increase output

  9. A firm's marginal revenue is currently zero. Which objective is this firm fulfilling?

    • Revenue maximisation
    • Profit maximisation
    • Profit satisficing
    • Sales maximisation

  10. If average revenue equals average cost, what profit level is the firm earning?

    • Maximum profit
    • Normal profit
    • Supernormal profit
    • Subnormal loss

  11. A firm sells 100 units at £5 each with total costs of £400. What is its total profit?

    • £10
    • £100
    • £400
    • £500

  12. If producing another unit adds £15 to costs and £15 to revenue, total profit will:

    • Decrease
    • Remain unchanged
    • Fall to zero
    • Increase

  13. A manager prioritises environmental targets over maximum profit. What type of objective is this?

    • Profit satisficing
    • Sales maximisation
    • Revenue maximisation
    • Corporate social responsibility

  14. What happens to total revenue if a firm produces where marginal revenue is negative?

    • Total revenue rises
    • Total profit rises
    • Total revenue falls
    • Average revenue rises

  15. If price is £8 and average total cost is £10, what is the firm making?

    • Economic loss
    • Supernormal profit
    • Maximum revenue
    • Normal profit

  16. Beyond what condition does producing additional output reduce a firm's total profit?

    • MR > MC
    • AR = AC
    • MC > MR
    • MR = 0

  17. Why might a firm pursue revenue maximisation rather than profit maximisation in the short run?

    • To satisfy regulators
    • To deter competitors
    • To raise prices
    • To minimise costs

  18. Under sales maximisation at AC = AR, what is the level of economic profit?

    • Zero
    • Infinite
    • Negative
    • Maximum

  19. What is the main reason divorce of ownership and control leads to profit satisficing?

    • High entry barriers
    • Identical owner goals
    • Perfect information
    • Divergent manager goals

  20. What term describes any profit earned by a firm over and above normal profit?

    • Gross profit
    • Subnormal profit
    • Accounting profit
    • Supernormal profit

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