Question

Why is profit maximisation important than utility maximization for a business

Answer 1

The more we have, the lower the utility of any additional unit of the good. When the marginal utility is higher because the supply is lower, prices rise relative to cost of production. ... Thus, the profit system motivates businesses to produce the goods and services which have the highest marginal utility.

Answer 2

You can't judge utility based on a scorecard, so profit maximization important than utility maximization for a business.

About utility maximization:

• You have to measure it with your heart and your head you have to do what's right for yourself, your customers, and society as a whole.
• The utility is intentionally vague and largely unmeasurable, yet it's the only thing that really matters in the end Companies can strive to maximize profits through appreciation.

About profit maximization:

• When the price increase causes a small decline in demand, the company can raise the price as much as necessary before demand becomes inelastic.

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