Outline the relationship between the profit-maximizing output and the revenue-maximizing output with reference: Economics Assignment, UCL, Ireland
| University | University of Limerick (UOL) |
| Subject | Economics |
- Outline the relationship between the profit-maximizing output and the revenue-maximizing output with reference to Baumol’s Model of managerial decision-making. Under what circumstances may a firm wish to pursue the objective of maximizing revenue rather than maximizing profit? Is this a realistic model of managerial decision-making?
- ‘A sales revenue maximizing firm will decrease price and increase production in response to an increase in fixed costs or lump-sum taxes. While a profit-maximizing firm will increase the price and reduce output by more than a sales maximizing firm when there is an increase in variable cost.’
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