Objectives and Pricing Policies of Firms
98 questions· page 1 of 10
The diagram shows a firm’s cost and revenue curves. The firm changes its objective from profit maximising to revenue maximisation.
Which area on the diagram will show the increase in total revenue?
Options
A X + Y + Z
B Y
C Y + Z
D Z
Which type of market structure enables price leadership to take place?
Options
A monopolistic competition
B oligopoly
C perfect competition
D pure monopoly
The diagram shows the cost and revenue curves of a firm.
The firm changes its objective from revenue maximisation to sales maximisation.
What will be the effect on quantity produced?
Options
A it will decrease from Y to W
B it will decrease from Z to W
C it will increase from X to Y
D it will increase from X to Z
The diagram shows the cost and revenue curves for a monopolist.
Which level of output represents sales maximisation?
Options
A output level A on Fig. 7.1
B output level B on Fig. 7.1
C output level C on Fig. 7.1
D output level D on Fig. 7.1
A firm has set a low price in the short run to act as a barrier to entry for new firms entering the market.
This is an example of which pricing strategy?
Options
A limit pricing
B predatory pricing
C price discrimination
D price leadership
A firm is operating at a level of output which corresponds to the point where MR = 0.
What objective is the firm achieving?
Options
A maximising consumer surplus
B maximising profit
C maximising sales
D maximising revenue
The diagram shows the costs and revenues of a firm operating in an imperfect market.
The firm is currently producing at the profit maximising level of output. It wishes to produce at the sales maximising level of output.
What would be the change in its output?
Options
A OW to OX
B OW to OY
C OW to OZ
D OY to OZ
The diagram shows the cost and revenue curves for a firm.
Which output level will enable a firm to achieve its objective of maximising its revenue?
Options
A output level A on Fig. 4.1
B output level B on Fig. 4.1
C output level C on Fig. 4.1
D output level D on Fig. 4.1
A firm that raises capital through a share issue has to satisfy both shareholders’ expectations and management aims. The management aims to produce at a non-profit maximum output.
Which strategy would necessarily prevent this aim?
Options
A fixing output where MC = MR in the long run
B operating price discrimination to maximise revenue
C rewarding shareholders more than returns to innovation
D separating ownership and control of the firm
A firm has the choice between five levels of output. The table shows the total cost and total revenue of producing at each output level. The firm could sell whatever output it produces.
| output units | total cost $ | total revenue $ |
|---|---|---|
| 1000 | 8 000 | 10 000 |
| 2000 | 12 000 | 18 000 |
| 3000 | 19 000 | 24 000 |
| 4000 | 23 000 | 28 000 |
| 5000 | 25 000 | 25 000 |
The firm decides to produce 4000 units.
What is the firm’s aim?
Options
A to maximise profit
B to maximise sales
C to maximise revenue
D to minimise average costs