7.7 & 7.8 Growth/pricing (A-level Econs)

7.7 Growth and survival of firms
7.7.1 reasons for different sizes of firms
7.7.2 internal growth of firms: organic growth and diversification
7.7.3 external growth of firms – integration (mergers and takeovers):
• methods of integration:
– horizontal
– vertical (forwards and backwards)
– conglomerate
• reasons for integration
• consequences of integration
7.7.4 cartels:
• conditions for an effective cartel
• consequences of a cartel
7.7.5 principal–agent problem arising from differing objectives of shareholders/owners and managers
7.8 Differing objectives and policies of firms
7.8.1 traditional profit-maximising objective of firms
7.8.2 an understanding of other objectives of firms:
• survival
• profit satisficing
• sales maximisation
• revenue maximisation
7.8.3 price discrimination – first, second and third degree:
• conditions for effective price discrimination
• consequences of price discrimination
7.8.4 other pricing policies:
• limit pricing
• predatory pricing
• price leadership
7.8.5 relationship between price elasticity of demand and a firm’s revenue:
• in a normal downward sloping demand curve
• in a kinked demand curve

• video links to key topics