The contemporary theory of the firm is based on the assumption that firms make decisions that are intended to
A) maximize sales.
B) minimally satisfy stockholders' goals.
C) maximize profit.
D) maximize input employment levels.

Question

Quizplus · Accepted Answer

The contemporary theory of the firm primarily assumes that firms aim to maximize profit. This involves making decisions that increase the difference between total revenues and total costs, which is the fundamental goal driving the strategic choices of most firms in a market economy.

The Contemporary Theory of the Firm Is Based on the Assumption