How Could the Assumption of Profit Maximization Be Justified

question 20

Multiple Choice

How could the assumption of profit maximization be justified?

• A)The managers of a commercial firm who do not seek profit maximisation are more likely to lose their jobs, so only profit maximisers will survive.
• B)Business scandals such as those that took place at Enron and Ahold prove the wrongness of this assumption; therefore nobody should try to justify it
• C)It cannot be justified and is only an easy and common way to overcoming the difficulty to define the ultimate goal of the firm
• D)It does not need to be justified because it is a basic assumption of business.

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Definitions:

Universal Joints

Flexible joints used in drive shafts that allow for the transmission of power between shafts that are not aligned.

Driveshaft Flexibility

The ability of a driveshaft to flex or bend without breaking, to accommodate movement and alignment changes in a vehicle's drivetrain.

Powertrain Components

Parts of a vehicle's system that produce power and deliver it to the road surface, including the engine, transmission, driveshafts, differentials, and final drive.

Drivetrain Components

The collective parts of a vehicle's drivetrain system, including the engine, transmission, driveshafts, differentials, and axles, responsible for propelling the vehicle.