January 2013
Intermediate to advanced
554 pages
18h 10m
English
Content preview from Managerial Economics
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Chapter 2
Objectives of a Business Firm, Decision Rules and the Process of Optimization
After studying this chapter, you should be able to understand:
- In traditional economic theory, the firm’s objective is to maximize the profits.
- In modern economic theory, there are a variety of objectives before a firm.
- For profit maximization, marginal cost (MC) should equal marginal revenue (MR) and MR should be falling while the MC is rising.
- A firm may pursue many goals simultaneously with the primary goal being that of maximization of profits.
- The problem occurs when the interest of the manager may be at variance from that of the stockholder.
- By keeping employees and consumers happy, the firm nowadays has to fulfill the social responsibilities.
- Optimization ...
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