Which of the Following Is a Reason Why a Firm

question 76

Multiple Choice

Which of the following is a reason why a firm may not maximize profits?

• A)Firms have limited resources and so must make imperfect decisions.
• B)Profit maximizing price and output level is often very difficult to determine.
• C)Managers may be more interested in maximizing their salaries, rather than profits.
• D)Firms do not know exactly what their marginal revenue and marginal cost curves are.
• E)All of the above.

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Definitions:

Accrual-based Net Income

The net income calculated under the accrual basis of accounting, where revenues and expenses are recorded when earned or incurred, not necessarily when cash is received or paid.

Domestic Corporations

Corporations that are incorporated and operate within the same country.

Noncontrolling Interest

A shareholder's equity in a corporation that doesn't give the shareholder a controlling interest, representing a share of equity and earnings not owned by the parent company.

Net Income

The total earnings or profit of a company after subtracting all expenses, including taxes, from its revenues.