Potential conflicts between these objectives
A commercial bank wants to be liquid, profitable, and secure — but pursuing one goal can make the others harder to achieve. These three objectives pull against each other.
Real World
Before the 2008 financial crisis, US banks like Lehman Brothers maximised profitability by issuing high-risk subprime mortgages, sacrificing security; when borrowers defaulted en masse, illiquidity and insolvency followed within months.
Exam Focus
For 'evaluate' questions, always judge which conflict is most significant and why — unsupported assertion of conflict earns no evaluation marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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