The managers of a public limited company, seeking to maximise growth and prestige, pursue an objective of sales revenue maximisation. Conversely, the company's shareholders seek to maximise profits. The table below shows the company's estimated revenue and cost structure at different levels of output:
| Output (thousand units) | Total Revenue (£000) | Total Cost (£000) |
|---|---|---|
| 10 | 150 | 70 |
| 20 | 260 | 120 |
| 30 | 330 | 180 |
| 40 | 360 | 250 |
| 50 | 350 | 330 |
As a result of the divorce of ownership and control, the managers successfully implement their preferred objective. What is the reduction in profit experienced by the shareholders compared to if their own objective had been achieved?
£10,000£10,000£10,000
£30,000£30,000£30,000
£40,000£40,000£40,000
£110,000£110,000£110,000
16 exam-style questions on OCR A Level Economics Business objectives. Each one has a worked solution and a mark scheme showing where the marks go.