The theory of the firm is based on the following two key assumptions:
A)Firms seek to become as large as possible,and they seek to maximize total revenue.
B)Each firm has a highly diversified product,and this leads to profit maximization.
C)Firms seek to maximize profit,and to distribute the maximum value in dividends.
D)Firms seek to maximize profits,and the firm is a single,consistent decision-making unit.
E)Firms seek to maximize revenues,and to maximize undistributed profits.

Question

Quizplus · Accepted Answer

The theory of the firm is based on the assumption that firms seek to maximize profits. Additionally, the firm is regarded as a single, consistent decision-making unit that seeks to achieve its objectives efficiently. This view of the firm is widely accepted by economists and has been used to explain a wide range of business and economic phenomena.

The Theory of the Firm Is Based on the Following