The Reason Economists Assume That Firms Try to Maximize Economic

question 16

Multiple Choice

The reason economists assume that firms try to maximize economic profit is

• A)over time, firms that don't earn profits will have difficulty securing financing to survive
• B)firms in the real world always maximize profit
• C)profit is easier to calculate than revenues
• D)if a firm fails to earn a profit in its first year, it will go out of business
• E)profit maximization is easier for firms than revenue maximization

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Definitions:

Compounded Quarterly

A method where interest earned is calculated and added to the principal amount every quarter, leading to interest on interest.

Future Value

The value of an investment at a specified future date, based on an assumed rate of growth over time.

Rate of Interest

The percentage at which interest is charged on a loan or earned on an investment over a specific period of time.

Mortgage Payment

A regular payment made to a lender that typically includes both interest and principal repayment on a mortgage loan.