The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3

-In economic theory, we assume that the goal of the firm is to:
A)maximize sales revenue.
B)maximize market share.
C)maximize the benefits it provides to its customers.
D)maximize the profit.
E)maximize the sales volume.

Question

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
 
-In economic theory, we assume that the goal of the firm is to:
A)maximize sales revenue. 
B)maximize market share. 
C)maximize the benefits it provides to its customers. 
D)maximize the profit. 
E)maximize the sales volume.

Quizplus · Accepted Answer

In economic theory, the main goal of the firm is to maximize its profit. This is achieved by producing output at the level where marginal cost equals marginal revenue, which happens where the MR=MC curve intersects the MC curve. The firm would then charge a price based on the demand for the product at that level of output, which would be indicated by the demand curve. Maximizing sales revenue or market share may be a strategy for achieving higher profits, but they are not the main goal. Likewise, maximizing benefits to customers or sales volume are not the goals of the firm, but they may be outcomes of maximizing profit.

The Figure Given Below Shows Three Short Run Average Total