According to the model of the firm, the management's main goal is to:
A) increase revenue from sales.
B) maximize profit.
C) maximize its market share.
D) minimize its variable cost per unit.
E) maintain a steady and predictable growth in earnings.

Question

Quizplus · Accepted Answer

According to the traditional model of the firm, the main goal of the management is to maximize profit. This means that the management will focus on increasing revenue and reducing costs to achieve the highest possible profit level. Maximizing market share or maintaining steady growth in earnings may be secondary goals that contribute to the main objective of profit maximization. Minimizing variable cost per unit is also important for profit maximization, but it is only a component of cost reduction strategies aimed at increasing profit.

According to the Model of the Firm, the Management's Main