Economics a level can anyone look at my essay please

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realbeautyxo
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Evaluate the view that all firms are aiming to maximise profit(25 markers)

Profit is total revenue minus total costs

Economic agents such as firms are seen to profit maximisers.A firm would profit maximise when marginal revenue is equal to marginal costs. There are many reasons why a firm would want to profit maximise. One reason is to be able to survive in the market. If a firm is making a loss this could result in them ln them having cash flow issues which could cause liquidity for the firm and lead to insolvency when they won't be able to pay their liabilities. Therefore all their invests and time would be gone to waste.

Another reason is firms such as monopoly are seen to maximise profits because there isn't any competitors and they are the price maximisers, with this it would enable them to pay their shareholders a higher return in investment in form as dividend. If shareholders are happy they are less likely to sell their share or withdraw their share capital invested. Shareholders would be more likely to invest more money for instance if there were any plans on expansion, therefore the business would be financially restrained when making future decisions on expansions

Another reason to maximise profits is to be able to pay higher wages. Many firms would want to pay higher wages in order to increase the staff morale and productivity which can lead to greater profits as outputs will increase. Also it would help increase retention rate and decrease staff turnover. Having lower staff turnover can mean that many workers can become very skilled and their jobs and costs could also be reduced increasing greater profits as many workers are able to cut down wastage and time on producing a tasks, therefore they would benefit from economies of scale.

However not all business are looking to maximise profits many business aim to maximise sales, this can be a strategy implemented in order to gain a high market share, which in the long run can be in their favour if they gain market dominance, allowing them to become a monopoly and being able to increase their profits, by charging higher prices or they could maximise sales in order for reputation and status. A firm would maximise sales when average revenue is equal to average costs.

Businesses might want to maximise revenue, this is when marginal revenue is equal to 0 and and they tend to do so when they are not price markers and they operate in a perfectly elastic demand curve. When ar= ac This is usually seen between businesses that sell homogenous products therefore prices are already set therefore they would want to increase revenue by increasing their outputs and quantity sold. This strategy would therefore benefit firms in this market.

Other businesses would look at the ethical sides and aim to for instance offer higher wages, want to be reduce environmentally issues such as air pollution in order to benefit the local environment , which can be an advantage to actually help them gain publicity, which then they can be able to charge a premium price their goods or services. Example Greggs is seen to be ethical as they are part of the fair trade, in which farmers are offered high wages in order to help increase their living standards and conditions. Publicity can enable a business to increase demand levels leading to greater sales and profits .

Overall, it can be seen that not all businesses are looking to maximise profits and it would depend on their corporate goal and objective and the market they operate in. A business that wants to dominate the market would look into maximising revenue for the short term as they haven't yet got the market share and strong brand to do so.
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Dominic254
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(Original post by realbeautyxo)
Evaluate the view that all firms are aiming to maximise profit(25 markers)

Profit is total revenue minus total costs

Economic agents such as firms are seen to profit maximisers.A firm would profit maximise when marginal revenue is equal to marginal costs. There are many reasons why a firm would want to profit maximise. One reason is to be able to survive in the market. If a firm is making a loss this could result in them ln them having cash flow issues which could cause liquidity for the firm and lead to insolvency when they won't be able to pay their liabilities. Therefore all their invests and time would be gone to waste.

Another reason is firms such as monopoly are seen to maximise profits because there isn't any competitors and they are the price maximisers, with this it would enable them to pay their shareholders a higher return in investment in form as dividend. If shareholders are happy they are less likely to sell their share or withdraw their share capital invested. Shareholders would be more likely to invest more money for instance if there were any plans on expansion, therefore the business would be financially restrained when making future decisions on expansions

Another reason to maximise profits is to be able to pay higher wages. Many firms would want to pay higher wages in order to increase the staff morale and productivity which can lead to greater profits as outputs will increase. Also it would help increase retention rate and decrease staff turnover. Having lower staff turnover can mean that many workers can become very skilled and their jobs and costs could also be reduced increasing greater profits as many workers are able to cut down wastage and time on producing a tasks, therefore they would benefit from economies of scale.

However not all business are looking to maximise profits many business aim to maximise sales, this can be a strategy implemented in order to gain a high market share, which in the long run can be in their favour if they gain market dominance, allowing them to become a monopoly and being able to increase their profits, by charging higher prices or they could maximise sales in order for reputation and status. A firm would maximise sales when average revenue is equal to average costs.

Businesses might want to maximise revenue, this is when marginal revenue is equal to 0 and and they tend to do so when they are not price markers and they operate in a perfectly elastic demand curve. When ar= ac This is usually seen between businesses that sell homogenous products therefore prices are already set therefore they would want to increase revenue by increasing their outputs and quantity sold. This strategy would therefore benefit firms in this market.

Other businesses would look at the ethical sides and aim to for instance offer higher wages, want to be reduce environmentally issues such as air pollution in order to benefit the local environment , which can be an advantage to actually help them gain publicity, which then they can be able to charge a premium price their goods or services. Example Greggs is seen to be ethical as they are part of the fair trade, in which farmers are offered high wages in order to help increase their living standards and conditions. Publicity can enable a business to increase demand levels leading to greater sales and profits .

Overall, it can be seen that not all businesses are looking to maximise profits and it would depend on their corporate goal and objective and the market they operate in. A business that wants to dominate the market would look into maximising revenue for the short term as they haven't yet got the market share and strong brand to do so.
Let me read it and get back to you
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Dominic254
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Before I start commenting on it. Were you not supposed to reference your essay?
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realbeautyxo
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(Original post by Dominic254)
Before I start commenting on it. Were you not supposed to reference your essay?
I got the essay from my revision book, it didn't exactly have any referencing or contexts I could refer to
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Dominic254
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(Original post by realbeautyxo)
I got the essay from my revision book, it didn't exactly have any referencing or contexts I could refer to
Okay let me go through it.
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XDaJokerz
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can u let me know what other people thought about your essay, i write in a similiar style but my teacher would have expected a evaluation, there is very little evaluation, you need to write the conflict for every point. Moreover you should have added data and your points are very simple you need to explain your points with real life examples. conclusion to me just sounds very weak. i mean just read it aloud, within in a conclusion you have to summarise your points, and value ur arguments and from there on you need to say '' I belive all firms maximise profits to a greater extent, this can be supported by.......'' And then write a small sentences explaining your decisions.

No Harsh feelings, but i pointe dout all the negatives, i want you to do well, so please take this advice. To finnaly point out ur definition is also quite weak , You need to say then ''therfore profit maximisation occurs where MC=MR'' and normally u should have 2.

I also understand u cant put diagrams here, but remember u need diagrams, i would say 1 diagram per point, as this will allow u to elaborate ur points .

Overall good luck my brudda , inshallah you will do well. Stay safe and let me know what other people have said

Boss
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XDaJokerz
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(Original post by Dominic254)
Okay let me go through it.
dominic have u gone throught it yet?
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hwpo1
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Lolz, you don't reference an A level Economics essay.

Do you do Edexcel Economics A or B?

I think its okay tbh. You need to add much more context. That small bit about Greggs is not enough.
Another really important point that you could have included is profit satisficing (firms may not profit maximize and they may want to pursue other objectives, such as leisure).
You also could have written about the principal-agent problem as an evaluation point. Firms may want to profit-maximizing so that shareholders can gain more dividends however, the agents (the managers) aren't profit maximizing as they may have other objectives such as maximizing sales to increase their sales bonus
You could have also written about how firms don't profit maximize as they may be implementing a loss leader strategy or maybe using predatory pricing/limit pricing to remove competitors out of the market
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XDaJokerz
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(Original post by hwpo1)
Lolz, you don't reference an A level Economics essay.

Do you do Edexcel Economics A or B?

I think its okay tbh. You need to add much more context. That small bit about Greggs is not enough.
Another really important point that you could have included is profit satisficing (firms may not profit maximize and they may want to pursue other objectives, such as leisure).
You also could have written about the principal-agent problem as an evaluation point. Firms may want to profit-maximizing so that shareholders can gain more dividends however, the agents (the managers) aren't profit maximizing as they may have other objectives such as maximizing sales to increase their sales bonus
You could have also written about how firms don't profit maximize as they may be implementing a loss leader strategy or maybe using predatory pricing/limit pricing to remove competitors out of the market
you could also talk about govt regulation that sets a maximum price ceiling, to prevent firm from exploiting customers. This is the beaty of economics literally everything links in
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hwpo1
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(Original post by XDaJokerz)
can u let me know what other people thought about your essay, i write in a similiar style but my teacher would have expected a evaluation, there is very little evaluation, you need to write the conflict for every point. Moreover you should have added data and your points are very simple you need to explain your points with real life examples. conclusion to me just sounds very weak. i mean just read it aloud, within in a conclusion you have to summarise your points, and value ur arguments and from there on you need to say '' I belive all firms maximise profits to a greater extent, this can be supported by.......'' And then write a small sentences explaining your decisions.

No Harsh feelings, but i pointe dout all the negatives, i want you to do well, so please take this advice. To finnaly point out ur definition is also quite weak , You need to say then ''therfore profit maximisation occurs where MC=MR'' and normally u should have 2.

I also understand u cant put diagrams here, but remember u need diagrams, i would say 1 diagram per point, as this will allow u to elaborate ur points .

Overall good luck my brudda , inshallah you will do well. Stay safe and let me know what other people have said

Boss
Yh there needs to be more evaluation and more context/examples.
The points aren't too simple.
Your not supposed to summarise all your points in a conclusion - you either use the 'if' / 'depends on' rule which is what he/she did. Or, you could add another evaluating point.
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hwpo1
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(Original post by XDaJokerz)
you could also talk about govt regulation that sets a maximum price ceiling, to prevent firm from exploiting customers. This is the beaty of economics literally everything links in
Yhh that's a good point.
Also could have talked about firms may want to profit
to increase their SNP, to allow them to be dynamically efficient.
I agree lol, econ is my fav subject from chem and bio.
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XDaJokerz
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(Original post by hwpo1)
Yh there needs to be more evaluation and more context/examples.
The points aren't too simple.
Your not supposed to summarise all your points in a conclusion - you either use the 'if' / 'depends on' rule which is what he/she did. Or, you could add another evaluating point.
but in that way it still remains unclear, a conclusion should be straight to the point, you can search up any good conclusion, and it summarises the cotnet the person has talked about in their essay. You also mentioned about the points not being simple, however if you read the essay (no harsh feelings) the points are good, but they need to explained more.
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realbeautyxo
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(Original post by XDaJokerz)
dominic have u gone throught it yet?
hi, no it's fine , like your helping me by given me cricisms I'd rather you be honest so I can know what to improve on, so thank you, ill take that onboard, and actually try re- write another essay. Have u got any essays you've done that I can look at and get tips from. Literally home teaching economics to myself lool
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realbeautyxo
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(Original post by hwpo1)
Lolz, you don't reference an A level Economics essay.

Do you do Edexcel Economics A or B?

I think its okay tbh. You need to add much more context. That small bit about Greggs is not enough.
Another really important point that you could have included is profit satisficing (firms may not profit maximize and they may want to pursue other objectives, such as leisure).
You also could have written about the principal-agent problem as an evaluation point. Firms may want to profit-maximizing so that shareholders can gain more dividends however, the agents (the managers) aren't profit maximizing as they may have other objectives such as maximizing sales to increase their sales bonus
You could have also written about how firms don't profit maximize as they may be implementing a loss leader strategy or maybe using predatory pricing/limit pricing to remove competitors out of the market
yeah thank you ill try to add in more links, ill re write the essay again and take onboard the tips, but thank you! I do economics A
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realbeautyxo
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(Original post by hwpo1)
Lolz, you don't reference an A level Economics essay.

Do you do Edexcel Economics A or B?

I think its okay tbh. You need to add much more context. That small bit about Greggs is not enough.
Another really important point that you could have included is profit satisficing (firms may not profit maximize and they may want to pursue other objectives, such as leisure).
You also could have written about the principal-agent problem as an evaluation point. Firms may want to profit-maximizing so that shareholders can gain more dividends however, the agents (the managers) aren't profit maximizing as they may have other objectives such as maximizing sales to increase their sales bonus
You could have also written about how firms don't profit maximize as they may be implementing a loss leader strategy or maybe using predatory pricing/limit pricing to remove competitors out of the market
Btw I could reference it was a 25 mark essay I found from my revision guide CGP
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hwpo1
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(Original post by realbeautyxo)
Btw I could reference it was a 25 mark essay I found from my revision guide CGP
So you didn't write this?
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realbeautyxo
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(Original post by hwpo1)
So you didn't write this?
I wrote it, I was saying that I got the question from my revision guide.
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realbeautyxo
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Are u doing Edexcel A also?
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hwpo1
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(Original post by XDaJokerz)
but in that way it still remains unclear, a conclusion should be straight to the point, you can search up any good conclusion, and it summarises the cotnet the person has talked about in their essay. You also mentioned about the points not being simple, however if you read the essay (no harsh feelings) the points are good, but they need to explained more.
yh the points can be developed more but its still good.
You don't get that many marks for a conclusion so it dm really.
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hwpo1
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oh right igy. and yh im doing edexcel A
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