"An Objective of Firms Is to Maximize Profits

question 39

Multiple Choice

"An objective of firms is to maximize profits." This statement

• A)has been proven by empirical testing to be always true.
• B)is an assumption used by economists to predict the behaviour of firms.
• C)is a normative statement and thus cannot be tested.
• D)applies only to corporations.
• E)is an unrealistic assumption,and therefore of little use to economists.

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Definitions:

Control

The process of directing, monitoring, and adjusting resources and operations to achieve certain objectives.

Actual Performance

The real, observed results achieved by an organization or individual, contrasted with planned or expected performance.

Expand Activities

The process of increasing the scope, reach, or scale of a company's operations or projects.

Management Accounting

This entails the generation of reports and financial statements for management, containing up-to-date and accurate financial and statistical details essential for supervisors to make decisions on a daily and short-term basis.