Differing objectives and policies of firms
7.8What the syllabus asks of you
- traditional profit-maximising objective of firms
- an understanding of other objectives of firms: survival
- an understanding of other objectives of firms: profit satisficing
- an understanding of other objectives of firms: sales maximisation
- an understanding of other objectives of firms: revenue maximisation
- price discrimination – first, second and third degree: conditions for effective price discrimination
- price discrimination – first, second and third degree: consequences of price discrimination
- other pricing policies: limit pricing
- other pricing policies: predatory pricing
- other pricing policies: price leadership
- relationship between price elasticity of demand and a firm’s revenue: in a normal downward sloping demand curve
- relationship between price elasticity of demand and a firm’s revenue: in a kinked demand curve
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34 questions
1May / June 2026 · Paper 32 · Q5Show mark scheme →
Adifferent price elasticities of demand
Bdifferent price elasticities of supply
Cdifferent producers
Ddifferent products
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2Oct / Nov 2025 · Paper 31 · Q7Show mark scheme →
Ait will decrease from Y to W
Bit will decrease from Z to W
Cit will increase from X to Y
Dit will increase from X to Z
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3Oct / Nov 2025 · Paper 33 · Q2Show mark scheme →
Alimit pricing
Bpredatory pricing
Cprice discrimination
Dprice leadership
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4Oct / Nov 2025 · Paper 34 · Q7Show mark scheme →
Amaximising consumer surplus
Bmaximising profit
Cmaximising sales
Dmaximising revenue
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5Feb / March 2025 · Paper 32 · Q4Show mark scheme →
AX + Y + Z
BY
CY + Z
DZ
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6Oct / Nov 2024 · Paper 31 · Q6Show mark scheme →
Aprofit maximising
Bprofit satisficing
Crevenue maximising
Dsales maximising
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7Oct / Nov 2024 · Paper 32 · Q7Show mark scheme →
Aminimum pricing
Bpredatory pricing
Cprice discrimination
Dprice leadership
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8Oct / Nov 2024 · Paper 33 · Q7Show mark scheme →
Arevenue maximisation: J; sales maximisation: L
Brevenue maximisation: L; sales maximisation: K
Crevenue maximisation: J; sales maximisation: K
Drevenue maximisation: L; sales maximisation: H
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9May / June 2024 · Paper 31 · Q4Show mark scheme →
A
B
C
D
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10May / June 2024 · Paper 31 · Q8Show mark scheme →
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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11May / June 2024 · Paper 32 · Q6Show mark scheme →
Ato maximise profit
Bto maximise sales
Cto maximise revenue
Dto minimise average costs
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12May / June 2024 · Paper 33 · Q4Show mark scheme →
A
B
C
D
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13May / June 2024 · Paper 33 · Q8Show mark scheme →
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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14Feb / March 2024 · Paper 32 · Q6Show mark scheme →
AOW to OX
BOW to OY
COW to OZ
DOY to OZ
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15Oct / Nov 2023 · Paper 31 · Q6Show mark scheme →
AThe product cannot be resold to another consumer.
BThe product must be price inelastic.
CThe profits from one market can be used to subsidise another market.
DThere are low barriers to entry into the market.
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16Oct / Nov 2023 · Paper 32 · Q6Show mark scheme →
AThe firm wishes to increase sales.
BThe firm wishes to increase its output.
CThe firm wishes to reduce prices.
DThe firm wishes to gain more profits.
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17Oct / Nov 2023 · Paper 32 · Q7Show mark scheme →
AConsumers are able to buy cheaply and then sell the product at a higher price.
BPrice elasticity of demand is the same for all consumers in the market.
CThe firm faces a perfectly elastic demand curve.
DThe firm is able to keep the different market segments separate.
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18Oct / Nov 2023 · Paper 33 · Q7Show mark scheme →
AAll consumers and producers must be in the same geographical location.
BCustomers must be divided into separate markets for the same product.
CEach separate market must have identical price elasticities of demand.
DPrice undercutting is required to enter a monopolistic market.
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19May / June 2023 · Paper 31 · Q5Show mark scheme →
Aaverage cost = average revenue
Bmarginal cost = average revenue
Cmarginal cost = marginal revenue
Dmarginal revenue = zero
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20May / June 2023 · Paper 32 · Q3Show mark scheme →
Aability to separate markets
Bdifferent price elasticities of demand in each market
Cmonopoly power
Dprice leadership
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21May / June 2023 · Paper 33 · Q5Show mark scheme →
Aaverage cost = average revenue
Bmarginal cost = average revenue
Cmarginal cost = marginal revenue
Dmarginal revenue = zero
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22Feb / March 2023 · Paper 32 · Q5Show mark scheme →
A
B
C
D
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23Oct / Nov 2022 · Paper 31 · Q10Show mark scheme →
A1 and 2 only
B1 and 3 only
C2 and 3 only
D1, 2 and 3
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24May / June 2022 · Paper 32 · Q8Show mark scheme →
Aprofit maximisation
Brevenue maximisation
Csales maximisation
Dsatisficing
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25Feb / March 2022 · Paper 32 · Q8Show mark scheme →
Aincrease short-run profits: no; maximise short-run market share: no; minimise short-run average costs: yes
Bincrease short-run profits: no; maximise short-run market share: yes; minimise short-run average costs: no
Cincrease short-run profits: yes; maximise short-run market share: no; minimise short-run average costs: yes
Dincrease short-run profits: yes; maximise short-run market share: yes; minimise short-run average costs: no
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26Oct / Nov 2021 · Paper 31 · Q12Show mark scheme →
Awhen a firm finances new investment largely by retained profits
Bwhere firms are companies with very active shareholders
Cwhere investment banks make takeovers easy to implement
Dwhen a firm has many shareholders and is managed by employees
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27Oct / Nov 2021 · Paper 32 · Q8Show mark scheme →
AAverage fixed cost is zero.
BAverage revenue is equal to average cost.
CMarginal cost is zero.
DMarginal revenue is greater than marginal cost.
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28Oct / Nov 2021 · Paper 32 · Q12Show mark scheme →
Adecreases from T to R
Bdecreases from U to T
Cincreases from S to T
Dincreases from S to U
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29May / June 2021 · Paper 31 · Q12Show mark scheme →
Amaximum efficiency — marginal cost is at a minimum
Bprofit maximising — marginal cost is equal to average revenue
Cquantity of sales maximising — marginal revenue is equal to average cost
Drevenue maximising — marginal revenue is zero
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30May / June 2021 · Paper 32 · Q6Show mark scheme →
AProfit maximisation occurs when average cost equals average revenue.
BSales maximisation occurs when marginal cost equals marginal revenue.
CSales revenue maximisation occurs when marginal revenue is equal to zero.
DSatisficing occurs when marginal cost is equal to zero.
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31May / June 2021 · Paper 32 · Q12Show mark scheme →
Aprofit maximising: normal profit; sales revenue maximising: supernormal profit
Bprofit maximising: subnormal profit; sales revenue maximising: normal profit
Cprofit maximising: supernormal profit; sales revenue maximising: normal profit
Dprofit maximising: supernormal profit; sales revenue maximising: supernormal profit
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32May / June 2021 · Paper 33 · Q12Show mark scheme →
Amaximum efficiency — marginal cost is at a minimum
Bprofit maximising — marginal cost is equal to average revenue
Cquantity of sales maximising — marginal revenue is equal to average cost
Drevenue maximising — marginal revenue is zero
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33Feb / March 2021 · Paper 32 · Q11Show mark scheme →
Aprofit maximisation to sales revenue maximisation
Bprofit maximisation to sales maximisation subject to earning a normal profit
Csales revenue maximisation to profit maximisation
Dsales revenue maximisation to sales maximisation subject to earning a normal profit
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34Feb / March 2021 · Paper 32 · Q12Show mark scheme →
Aprice-quantity graph with a straight upward-sloping TR line from the origin
Bprice-quantity graph with a horizontal TR line
Cprice-quantity graph with a TR curve rising then falling (inverted U)
Dprice-quantity graph with a TR curve rising at an increasing rate
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