Economics (AS & A Level) · May / June 2024 · Paper 31 · Question 8
9708Differing objectives and policies of firms
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?
- Afixing output where MC = MR in the long run
- Boperating price discrimination to maximise revenue
- Crewarding shareholders more than returns to innovation
- Dseparating ownership and control of the firm
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Correct answer: A. fixing output where MC = MR in the long run
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