A Level Economics AQA Practice Exam

What is the primary objective for firms focused on mere survival?

1. Maximizing profits

2. Increasing sales significantly

3. Maintaining minimum operational costs

4. Achieving enough profit to stay in business

The correct answer is: Achieving enough profit to stay in business

Firms that prioritize mere survival are primarily concerned with generating enough profit to cover their basic operational costs and remain in business. This objective arises often during challenging economic conditions or periods of financial instability, where the primary focus shifts from growth and profit maximization to just sustaining operations. Maintaining just enough profit ensures that a business can continue to pay its employees, suppliers, and other essential expenditures. When a firm's existence is at stake, the emphasis is placed on achieving a level of profit that allows for continued operation, rather than pursuing aggressive growth strategies or large sales increases. In contrast, options related to maximizing profits or significantly increasing sales become less relevant when a firm's survival is at risk; such strategies are often more sustainable in a healthier economic environment. Therefore, the focus on staying afloat through basic profitability is the most critical objective for firms in this situation.