4. Sales maximization
A firm achieves sales maximisation when the average cost (AC) is equal to the
average revenue (AR) which is also a point at which a firm breaks even (makes
zero profit.)
Sales maximisation involves supplying the largest output possible consistent with
earning at least normal profits where -
average revenue = average cost (AR=AC).
5. Profit maximization
The most important objective of any firm is to maximise its profit. The basic profit
calculation is the total revenue minus the total cost. In economics, profit refers to
the returns over and above the opportunity cost.
Profit=Total revenue –total cost
6. Utility maximization
Utility maximization is the concept that individuals and organizations seek to attain
the highest level of satisfaction from their economic decisions.
Utility function measures the intensity to which an individual’s fulfilment is met.
Utility maximisation refers to the concept that individuals and firms seek to get the
highest satisfaction from their economic decisions.
For example, when deciding how to spend a fixed some, individuals will purchase the
combination of goods/services that give the most satisfaction.
7. Welfare maximization
Welfare maximisation refers to the policy which looks after the welfare of the
society and its people.
Its main focus is to provide opportunities to all people equitably.
This ensures that there is fair distribution of goods and services among the rich
and the poor.
8. Growth maximization
An alternative to profit maximisation is for a firm to try and increase market share
and increase the size of the firm.
They can do this by cutting price and increasing sales.
Growth maximisation may come at the expense of lower profits.
