discuss whether or not firms try to maximise profits
(8 marks)
6 points
Answers
Answered by
10
Some firms don't make profit maximization as their ultimate gold. They seek to maximise revenue or market share. Seeking to increase market share and sales will lead to lower profit, but can have advantages for firms, consumers and workers. Often firms seems to be most concerned with increasing their market share. This could be labelled sales maximization.
however, despites the benefits of profit maximization. In practice, there are several locations where firms will not pursue profit maximization.
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16
It is very important for all the phones to try to maximize profits.
Explanation:
- Every firm tries to maximize its profits because profits are the source of finance for the upcoming activities of any firm.
- Profits also ensure the survival of a firm in the long run. When a firm is earning good profit, it can also employ people and retain the already employed people.
- When a firm is unable to earn profits, it has to shut down its operations and lay off the people working with them. This could result in a huge unemployment problem in society.
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