Share price maximization is good for society because consumers benefit.Which of the following best describes this idea?
A)Firms that maximize share price minimize costs and produce low-quality goods, which only benefits producers.
B)Firms that maximize share price minimize costs and produce high quality goods that consumers demand.
C)Firms that maximize share price maximize costs and produce low-quality goods, which benefits society.
D)Most Canadian households do not own or participate, directly or indirectly, in the stock market and as such they do not benefit from the production of quality goods produced at low cost.

Question

Quizplus · Accepted Answer

Firms that maximize share price are incentivized to produce high quality goods at lower costs, which benefits consumers by providing them with quality products at affordable prices. This can lead to increased consumer welfare and improved standards of living for society as a whole. Option A is wrong since it assumes that minimizing costs and producing low-quality goods are the only ways to maximize share price. Option C is incorrect since it assumes that firms maximize costs, which does not align with the principles of profit maximization. Option D is irrelevant to the given statement.

Share Price Maximization Is Good for Society Because Consumers Benefit