The Profit-Maximization Assumption of Economic Theory Does Not Fit Reality

question 80

Multiple Choice

The profit-maximization assumption of economic theory does not fit reality because:

• A) all real firms want to maximize long-term profits rather than short-run profits.
• B) all real firms want to maximize their share of the market.
• C) real-world firms have a single goal, but this goal has nothing to do with profits.
• D) real-world firms have many goals, which depend on the incentive structure incorporated into the firm's organization.

---

Definitions:

Electronystagmography

A diagnostic test that records involuntary movements of the eye (nystagmus) to assess the vestibular system.

Tympanometry

A test that measures the movement of the eardrum in response to changes in air pressure, used to diagnose issues in the middle ear.

Tympanometry

A diagnostic test that measures the movement of the eardrum in response to changes in air pressure, used to detect fluid in the middle ear or Eustachian tube dysfunction.

Tympanic Membrane

Also known as the eardrum, it is a thin layer that separates the outer ear from the middle ear and vibrates in response to sound waves.