Lesson 4.1.5.2

4.1.5.2 The objectives of firms Quiz: AQA Economics, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.1.5.2, The objectives of firms: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

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The 20 questions

  1. The traditional theory of the firm assumes that firms aim to:

    • Maximise market share
    • Maximise profits
    • Maximise sales revenue
    • Maximise employment

  2. The profit-maximising rule is:

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

  3. Who makes day-to-day decisions when ownership is divorced from control?

    • Consumers
    • Regulators
    • Managers
    • Shareholders

  4. What do managers aim for when following the satisficing principle?

    • Minimum average cost
    • Satisfactory profit level
    • Maximum sales revenue
    • Maximum profit level

  5. Which of these is an alternative business objective to profit maximisation?

    • Negative total revenue
    • Cost maximisation
    • Diminishing returns
    • Market share growth

  6. If marginal cost (£11) exceeds marginal revenue (£9), what should a firm do to maximise profit?

    • Shut down immediately
    • Reduce output
    • Increase output
    • Maintain output

  7. At what output level is a firm operating when marginal revenue equals marginal cost?

    • Break-even output
    • Revenue-maximising output
    • Sales-maximising output
    • Profit-maximising output

  8. What condition defines the output level for a sales-revenue maximising firm?

    • Price equals revenue
    • Marginal cost zero
    • Marginal revenue zero
    • Price equals cost

  9. Which concept describes managers pursuing their own goals rather than shareholder profit?

    • Natural monopoly
    • Economies of scale
    • Creative destruction
    • Principal-agent problem

  10. What is a primary benefit to a firm of pursuing a quality objective?

    • Lower product prices
    • Lower production barriers
    • Zero marginal cost
    • Higher customer loyalty

  11. Which term describes setting targets to achieve an adequate profit rather than maximum profit?

    • Profit maximisation
    • Sales maximisation
    • Predatory pricing
    • Satisficing

  12. Why might real-world firms fail to achieve profit maximisation?

    • Zero fixed costs
    • Homogeneous products
    • Perfect mobility
    • Imperfect information

  13. Which action directly helps a firm to increase its market share?

    • Price cutting
    • Raising prices
    • Reducing advertising
    • Cutting output

  14. Total revenue is £120,000 at output 1,000 and £130,000 at output 1,100. The marginal revenue of the extra 100 units is:

    • £1,200 per unit
    • £100 per unit
    • £10 per unit
    • £130 per unit

  15. How does output under sales revenue maximisation compare to profit maximisation?

    • Lower output
    • Zero output
    • Identical output
    • Higher output

  16. Under which market condition is a firm most likely to prioritise survival as an objective?

    • Severe economic recession
    • Monopoly market power
    • Falling marginal costs
    • High profit margins

  17. What objective involves aiming for an acceptable level of profit rather than the maximum possible?

    • Sales maximisation
    • Revenue maximisation
    • Profit maximisation
    • Satisficing

  18. What is a key benefit to managers of pursuing firm growth instead of profit maximisation?

    • Lower tax rates
    • Higher salaries
    • Reduced firm size
    • Lower output levels

  19. Which strategy is most effective for a firm seeking to expand its market share?

    • Cutting production
    • Eliminating advertising
    • Raising prices
    • Cutting prices

  20. Profit-maximising firms may act against consumer interests by doing what to prices?

    • Raising prices
    • Subsidising prices
    • Capping prices
    • Lowering prices

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