Lesson 3.2.1

3.2.1 Business objectives Quiz: Pearson Edexcel Economics, Unit 3

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.2.1, Business objectives: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.

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The 20 questions

  1. At what output condition does a firm achieve profit maximisation?

    • TC equals TR
    • AC equals AR
    • MR equals zero
    • MC equals MR

  2. At what output level does revenue maximisation occur?

    • MC equals AC
    • MR equals zero
    • MC equals MR
    • AC equals AR

  3. At what point does a firm achieve sales maximisation?

    • MR equals zero
    • AC equals AR
    • MC equals AR
    • MC equals MR

  4. Why might business growth be a key objective for firm managers?

    • Economies of scale
    • Higher unit costs
    • Diminishing prestige
    • Lower market power

  5. What is meant by the business objective of satisficing?

    • Minimising average cost
    • Maximising total profit
    • Maximising market share
    • Meeting minimum targets

  6. Which business objective is achieved where marginal revenue equals zero?

    • Profit maximisation
    • Sales maximisation
    • Satisficing
    • Revenue maximisation

  7. What condition must be met for a firm to achieve profit maximisation?

    • AR equals AC
    • MR equals MC
    • AC equals MC
    • MR equals zero

  8. Compared to profit maximisation, what output and price combination does sales maximisation produce?

    • Lower output, higher price
    • Higher output, higher price
    • Higher output, lower price
    • Lower output, lower price

  9. Making enough profit to satisfy owners while pursuing other goals is known as what?

    • Profit maximisation
    • Sales maximisation
    • Satisficing
    • Revenue maximisation

  10. A manager paid directly on sales volume is most likely to pursue which objective?

    • Satisficing
    • Sales maximisation
    • Cost minimisation
    • Profit maximisation

  11. Which short-run objective do firms typically prioritise during a severe economic recession?

    • Market dominance
    • Profit maximisation
    • Survival
    • Sales maximisation

  12. Which business objective focuses primarily on expanding market share and scale of production?

    • Satisficing
    • Cost minimisation
    • Growth
    • Survival

  13. What is the primary objective of a non-profit organisation?

    • Profit maximisation
    • Revenue maximisation
    • Social welfare
    • Sales maximisation

  14. If a profit-maximising firm experiences an increase in fixed costs, what happens to its output and profit?

    • Output unchanged, profit falls
    • Output rises, profit falls
    • Output falls, profit rises
    • Output unchanged, profit rises

  15. What principal-agent issue occurs when managers pursue goals distinct from shareholders' profit goals?

    • Asymmetric information
    • Moral hazard
    • Divorce of ownership
    • Regulatory capture

  16. What happens to price and output when a firm shifts from profit to revenue maximisation?

    • Price falls, output rises
    • Price rises, output rises
    • Price rises, output falls
    • Price falls, output falls

  17. Why do regulators care if a firm pursues sales maximisation rather than profit maximisation?

    • Lower consumer surplus
    • Higher market barriers
    • Higher consumer surplus
    • Zero economic profit

  18. A firm faces demand P = 100 - 2Q and total cost TC = 20 + 10Q. What output maximises total revenue?

    • Q = 25
    • Q = 22.5
    • Q = 50
    • Q = 10

  19. Using the same firm (P = 100 - 2Q, MC = 10), what is the profit-maximising price?

    • £50
    • £55
    • £45
    • £60

  20. At what output condition does a firm achieve sales maximisation?

    • Where MC equals MR
    • Where AVC equals MR
    • Where AC equals AR
    • Where MC equals AR

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