The standard assumption in economic analysis is that firms attempt to maximize
A) sales.
B) profits.
C) costs.
D) reliability.
E) production.

Question

Quizplus · Accepted Answer

The main objective of firms is to maximize their profits, which is achieved by maximizing revenues and minimizing costs. Maximizing sales or production may not necessarily lead to higher profits if the costs of production are too high. Similarly, minimizing costs may also not lead to higher profits if it results in lower-quality products or reduced sales. Thus, the best choice is B.

The Standard Assumption in Economic Analysis Is That Firms Attempt