Economic theory assumes that the goal of firms is to maximize

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Economic theory assumes that the goal of firms is to maximize their profits, which is the difference between total revenue and total costs. Firms aim to increase their profits by producing goods and services that are in demand and by managing their costs effectively. While sales and total revenue are important, they do not necessarily lead to higher profits if costs are not managed properly. Price is also important, but it is a decision that firms make based on their profit-maximizing objectives. Utility, while relevant in the context of consumer choice theory, is not a relevant goal for firms.

Economic Theory Assumes That the Goal of Firms Is to Maximize