The Idea That Firms Pursue Actions to Maximize Profits Is

question 17

Multiple Choice

The idea that firms pursue actions to maximize profits is:

• A) generally rejected by economists in favor of the idea that firms maximize revenues.
• B) a reasonable assumption, because firms that do not maximize profits will see their market share drain away to their profit-maximizing rivals.
• C) easier to accomplish when management has little oversight from shareholders and boards of directors.
• D) refuted by evidence that firms engage in goodwill advertising and other charitable activities.