What this practice covers
These questions are drawn from past CIE 9708 papers and filtered to differing objectives and policies of firms. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
Start practising Paper 3 MCQs →
What examiners see students get wrong here
These are the errors that cost marks on differing objectives and policies of firms, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Applying MC = MR to a firm that is not maximising profit.
- Confusing revenue maximisation (MR = 0) with sales maximisation (AR = AC).
- Explaining the principal-agent problem as managerial dishonesty rather than divergent objectives under asymmetric information.
- Calling any price difference price discrimination, when a cost difference makes it something else.
- Forgetting that preventing resale is a necessary condition.
- Stating that price discrimination always harms consumers, ignoring the output effect.
- Confusing limit pricing with predatory pricing. Limit pricing is above cost and aimed at entrants; predatory pricing is below cost and aimed at existing rivals.
- Drawing the kinked demand curve without the discontinuity in marginal revenue, which is the whole point of the model.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Differing Objectives and Policies of Firms revision notes.