1 Classical economic theory suggests that firms aim to achieve:A BreakevenB Short-run profit maximisationC Long-run profit maximisationD Satisficing profit (1 mark)2 Which one of the following stakeholders is least likely to agree with an objectiveof profit satisficing?A ConsumersB EmployeesC ShareholdersD Suppliers (1 mark)3 Growth can be measured by all of the following except:A A change in sales revenueB A change in volumeC A change in profitD A change in the number of outlets (1 mark)4 State two examples of ethical objectives. (2 marks)5 What is the formula for calculating market share? (2 marks)6 A firm’s sales are £840,000 in 2014 and £780,000 in 2015. What is the firm’srate of growth over this time period? (3 marks)7 Explain the difference between short-run profit maximisation and long-runprofit maximisation. (4 marks)8 Give one reason why a firm’s profit might not be related solely to how wellit manages its resources. (5 marks)9 What is meant by ‘the divorce of ownership from control’? (5 marks)10 Explain why new firms are likely to prioritise survival as an objective. (6 marks)11 Explain why profit is likely to be more important than a firm’s other objectives. (10 marks

Classical economic theory suggests that firms aim to achieve: C Long-run profit maximisation. This is because in the long run, firms can adjust all their inputs and aim to achieve the highest possible profit.

The stakeholder least likely to agree with an objective of profit satisficing is: C Shareholders. This is because shareholders invest in a company with the expectation of receiving a return on their investment, which is maximized when the company is making maximum profits.

Growth can be measured by all of the following except: D A change in the number of outlets. The number of outlets a business has does not necessarily reflect its growth.

Two examples of ethical objectives could be: (1) Reducing the company's carbon footprint and (2) Ensuring fair trade practices.

The formula for calculating market share is: (Company's Sales / Total Market Sales) * 100.

The firm's rate of growth over this time period can be calculated as: ((780,000 - 840,000) / 840,000) * 100 = -7.14%. This indicates a decrease or negative growth.

Short-run profit maximisation refers to a situation where a firm seeks to maximize its profits in the immediate term, even if it means making decisions that may not be sustainable or beneficial in the long run. Long-run profit maximisation, on the other hand, involves making decisions that may not yield immediate profits but will lead to higher profits in the future.

A firm’s profit might not be related solely to how well it manages its resources because external factors, such as market conditions, competition, and economic trends, can also significantly impact a firm's profitability.

'The divorce of ownership from control' refers to a situation in a corporation where the shareholders (owners) do not directly control the day-to-day operations of the business. Instead, this control is given to professional managers who are hired by the shareholders.

New firms are likely to prioritize survival as an objective because the initial stages of a business are often the most challenging. The firm may face competition from established firms, have limited resources, and lack a customer base.

Profit is likely to be more important than a firm’s other objectives because it ensures the survival and growth of the business. Without profit, a firm cannot invest in new projects, pay its employees, or return money to its investors.