What are the different Goals of profit maximization and alternative theories of the firm.
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In essence the theories based on the profit-maximization goal suggests that firm seeks to make the difference between total revenue (or sales receipt) and total cost (outgo) as large as possible. ... The short-run profit maximization hypothesis is based on the famous marginalist rule which we have explained.
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The business firms and the other business entities are guided by certain objectives. Profit maximization has been one the prime objectives of the private business enterprises. Later on, in recent times new theories of business firms have generated alternative objectives of firms. To be specific, the new theories lay stress on the role of managers and their behavioural pattern in deciding the price and output under Oligopoly.
Sales maximization model of Oligopoly is one of the objectives of a business firm apart from profit maximization. Besides there is an array of behavioural theories and managerial theories developed by Cyert and March, H.A.Simon, O.E.Williamson, and R. Marris and others which have added a new dimensions in addition to the traditional objective of profit maximization.
Managerial theories of the firm, as developed by William Baumol (1958), Robin Marris (1964) and Oliver E. Williamson (1966), suggest that managers would seek to maximise their own utility and consider the implications of this for firm behavior in contrast to the profit-maximising case. (Baumol suggested that managers’ interests are best served by maximizing sales after achieving a minimum level of profit which satisfies shareholders
1. Objective of maximization of Sales revenue
2. Objective of maximization of the growth rate
3. Objective of maximization of manager’s utility function
4. Objective of making satisfactory rate of
Sales maximization model of Oligopoly is one of the objectives of a business firm apart from profit maximization. Besides there is an array of behavioural theories and managerial theories developed by Cyert and March, H.A.Simon, O.E.Williamson, and R. Marris and others which have added a new dimensions in addition to the traditional objective of profit maximization.
Managerial theories of the firm, as developed by William Baumol (1958), Robin Marris (1964) and Oliver E. Williamson (1966), suggest that managers would seek to maximise their own utility and consider the implications of this for firm behavior in contrast to the profit-maximising case. (Baumol suggested that managers’ interests are best served by maximizing sales after achieving a minimum level of profit which satisfies shareholders
1. Objective of maximization of Sales revenue
2. Objective of maximization of the growth rate
3. Objective of maximization of manager’s utility function
4. Objective of making satisfactory rate of
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