Profit Maximization as the Goal of the Firm Is NOT

question 11

Multiple Choice

Profit maximization as the goal of the firm is NOT ideal because

• A) profits today are less desirable than profits earned in future years.
• B) profit maximization does not consider risk.
• C) cash flows are more representative of financial strength.
• D) profits are only accounting measures.

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Definitions:

Production Possibility Frontier

A graphical representation depicting the maximum output possibilities for two goods, given a set of inputs, highlighting the trade-offs in production choices.

Efficiency

The ability to achieve a desired outcome or output with the least waste of time, effort, or resources.

Production Possibility Curve

A graphical representation that shows the maximum possible output combinations of two goods or services an economy can achieve with existing resources and technology.

Capital

In economics, capital refers to the financial assets or the resources that businesses use to produce goods and services, such as equipment, buildings, and machinery.