Question

It is assumed in economic theory that:

• A. Decision making within the firm is usually undertaken by managers, but never by the owners.
• B. The ultimate goal of the firm is to maximize profits, regardless of firm size or type of business organization.
• C. As the firms size increases, so do its goals.
• D. The basic decision making unit of any firm is it owners.

Answer 1

Answer: (B)

The ultimate goal of the firm is to maximize profits, regardless of firm size or type of business organization.

In economic theory it is assumed that the ultimate goal of the firm is to maximize profits, regardless of firm size or type of business organization, because every firm tries to maximize its profits.