Sales maximisation

supplying as much output as possible and earning

normal profit
focus on increasing sales instead of amount of
profit and revenue
Reasons:
Economies of scale
- increase in output -> lower cost of production
Limit pricing
- earning normal profit -> remove incentive for new firm to enter
Principle agent problem
- manager may focus on the sales & owner focus on the profit
- different view point & understanding
Flood the market
- lowest price result in high sales -> increase awareness & loyalty of
consumers and increase market share

Step1: draw the two axis with

labelling
step2: draw the AR, MR, MC & AC
curve
step 3: find the sales maximisation
point (AR=AC)
step 4: from that point, we are
able to find the quantity
step 5: last, read the price from the
AR curve