Business Objectives in Economics (Online Lesson)

In this online lesson, we cover the basics of the different business objectives, including profit maximisation, revenue maximisation, sales volume maximisation, and a range of efficiencies.

WHAT YOU'LL STUDY IN THIS ONLINE LESSON

In this online lesson, you will cover the definitions, formulae and diagrams for each of the following objectives:

• profit maximisation
• revenue maximisation
• sales volume maximisation
• satisficing
• productive, allocative, social and dynamic efficiency

Additional teacher guidance is available at the end of this lesson. Thank you to Cathy Williams and Jon Clark for their contributions to this lesson.

HOW TO USE THIS ONLINE LESSON

Follow along in order of the activities shown below. Most are based on short videos, including activities for you to think about and try at home, as well as some extra worksheet-based activities and interactive games.

If you would like to download a simple PDF worksheet to accompany the video activities, you can download it here. You can print it off and annotate it for your own notes, or make your own notes on a separate piece of paper to add to your school/college file.

ACTIVITY 1: VIDEO - OVERVIEW

In this video, we provide a quick introduction to some of the key business objectives used by economists.

ACTIVITY 2: VIDEO - OBJECTIVES IN MORE DETAIL

In this video, we cover profit maximisation, revenue maximisation and sales volume maximisation in terms of their formulae and relevant diagrams.

ACTIVITY 3: RESEARCH AND THINKING TASK

In reality, many business owners do not think like economists, and consider business objectives in a different way.

Carry out research to find out as many alternative objectives as you can. This summary from Clear Point Strategy might provide you with a good starting point. Can you then group together these alternative objectives into categories that roughly match the economics objectives?

ACTIVITY 4: VIDEO - EFFICIENCY

We can consider the different types of efficiency to be alternative business objectives. We cover these in this video.

ACTIVITY 5: APPLICATION TASK - EFFICIENCY ADVISOR

You will need to download this additional tutor2u resource for this activity. The activity requires you to read some short case studies of hypothetical businesses, and consider the types of efficiency being achieved and how they could be improved.

ACTIVITY 6: VIDEO - EFFICIENCY AND BUSINESS OBJECTIVES

You may find this video to be more accessible if you already have a bit of an understanding of the main types of market structure, because we link efficiency and market structures together in a simple way.

ACTIVITY 7: GAME - PIN THE TAIL ON THE DIAGRAM!

Cast your mind back to birthday parties when you were very little - you probably played a game of Pin the Tail on the Donkey at some point. This activity adapts that concept for business objectives. Can you match the objectives to the correct point on the cost and revenue diagram?

You can download the resource here.

ACTIVITY 8: VIDEO - APPLICATION

In this video, we work through some applied examples (numerical and qualitative) for the topic of business objectives.

EXTENSION TASK: WHAT ARE COMPANIES FOR?

Start by reading this article from The Economist which considers whether we should require businesses to focus on tackling social issues.

Then, carry out your own research into Oliver Williamson's theory of transaction costs, which explores the boundaries of what firms decide to produce (or not produce!). Write a one-page summary of the theory.

ADDITIONAL TEACHER GUIDANCE

This lesson comprises:

• around 30 minutes of guided video, spread across 5 videos
• around 30 minutes of student thinking and activity time across those 5 videos
• 2 additional worksheet-based thinking activities: 1 supports students in identifying objectives on cost and revenue diagrams, and the other allows them to practise applying the concept of efficiency to businesses
• an extension task, which considers the role of business