What is the difference between profit and revenue maximisation?

Profit maximisation occurs where marginal cost equals marginal revenue (MC=MR). Revenue maximisation occurs where marginal revenue equals zero (MR=0). Firms may choose revenue maximisation to drive out competitors or increase market share, even if it means lower short-term profits.

What is profit satisficing?

Profit satisficing is when a firm makes just enough profit to keep its shareholders happy, while sacrificing maximum profit to satisfy other stakeholders like managers or employees. This often happens due to the principle-agent problem in large firms.

Edexcel A-Level Economics Notes | 3.2 Business Objectives

Last updated on 07 Jul 2025

Marginal: the impact of one additional unit of something e.g. the utility of your next chocolate bar
Profit maximisation: occurs at the quantity where MC = MR.
Reasons for profit maximisation: pay shareholders dividends, or for re-investment and innovation
Revenue maximisation: occurs at the quantity where MR = 0.
Reasons for revenue maximisation: drive competitors away, exploit economies of scale, divorce of ownership from control, increase market share.
Sales maximisation: occurs at the quantity where AC = AR.
Reasons for sales maximisation: increase customer base and increase brand loyalty, exploit economies of scale, divorce of ownership frpm comtrol, increase market share.
Profit satisficing: making enough profit to keep shareholders happy but also sacrificing some away from maximum profit to keep other stakeholders happy, such as managers, workers, customers.

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