When a firm is a profit maximizer

Question

Quizplus · Accepted Answer

When a firm is a profit maximizer, its primary objective is to maximize profits, which means it does not care directly about the number of workers it hires. It will only hire workers if they contribute to increasing profits, and if reducing the number of workers will also increase profits, the firm may choose to do so. Maximizing revenue is not the same as maximizing profits since revenue may increase without an increase in profit, so choice C is incorrect. Choice A is also incorrect because producing as much of its product as possible may lead to higher costs and lower profits, which goes against the objective of profit maximization. Finally, choice B is incorrect because the number of employees is not a direct measure of success for a profit-maximizing firm.

When a Firm Is a Profit Maximizer