Economists Normally Assume That the Goal of a Firm Is

question 200

Multiple Choice

Economists normally assume that the goal of a firm is to i) earn profits as large as possible, even if it means reducing output.
Ii) earn revenues as large as possible, even if it means reducing profits.
Iii) minimize costs, regardless of profits.

• A) i) only
• B) i) and ii) only
• C) ii) and iii) only
• D) i), ii), and iii)

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Definitions:

Acres

A unit of measurement used primarily in the U.S. to describe the size of land, equating to 43,560 square feet.

Economic Rents

Extra earnings or return above the normal expected return of an investment or economic activity.

Reallocation

The process of redistributing resources or assets from less productive uses to more productive ones in order to enhance efficiency and economic output.

Diminishing Returns

A rule that asserts when one input in the production process is augmented and the rest remain unchanged, the resultant extra production will ultimately diminish.