Economists normally assume that the goal of a firm is to (i)
Earn profits as large as possible, even if it means reducing output.
(ii)
Earn revenues as large as possible, even if it means reducing profits.
(iii)
Minimize costs, regardless of profits.
A)(i) only
B)(i) and (ii) only
C)(ii) and (iii) only
D)(i), (ii), and (iii)

Question

Quizplus · Accepted Answer

The goal of a firm according to economists is to maximize profits. While earning maximum revenues may be important, it is only a means to achieve the ultimate goal of maximizing profits. Similarly, minimizing costs may be necessary to maximize profits, but minimizing costs alone does not necessarily ensure maximum profits. Therefore, the only accurate statement among the given options is that the goal of a firm is to earn profits as large as possible, even if it means reducing output.

Economists Normally Assume That the Goal of a Firm Is