Which of the Following Statements Concerning a Firm's Quest to Maximise

question 32

Multiple Choice

Which of the following statements concerning a firm's quest to maximise wealth is correct?

• A) In extremely competitive industries, we would expect firms would voluntarily engage in many socially beneficial projects to try to maximise their shares' values.
• B) Actions that maximise a firm's share price are inconsistent with maximising social welfare.
• C) The concepts of social responsibility and ethical responsibility on the part of companies are completely different and neither is relevant in maximising share price.
• D) In a competitive market, if a group of firms does not spend resources making social welfare improvements, but another group does, in general, this will not affect the second group's ability to attract funds.
• E) If government did not mandate socially responsible corporate actions, such as those relating to product safety and fair hiring practices, most firms in competitive markets probably would not pursue such policies voluntarily.

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Definitions:

Output Effect

The change in output quantity that results from a variation in price, affecting producers' supply levels and market equilibrium.

Complementary Resources

Resources that enhance the value or utility of another resource when used together.

Employment of Labor

The engagement and utilization of human labor force in the production process, encompassing hiring practices, workforce management, and employment policies.

Perfect Competitor

A firm in a perfectly competitive market where it is a price taker and has no control over the market price of its product.