The modern theory of the firm holds that firms behave in a way that is designed to maximize
A) profit.
B) the value of the firm.
C) monopoly power.
D) total revenue.

Question

Quizplus · Accepted Answer

The modern theory of the firm posits that the primary goal of a firm is to maximize its value, which is often reflected in the market value of the firm's shares. This approach aligns the interests of shareholders and management towards long-term growth and sustainability, rather than short-term profit or revenue maximization.

The Modern Theory of the Firm Holds That Firms Behave