Question

Discuss the implications of discarding the profit maximization assumption for the effectiveness and efficiency of the market system

Answer 1

The implications of discarding the profit maximization assumption for the effectiveness and efficiency of the market system relate to the imbalance of the economic laws of supply and demand, which is responsible for the sustainable functioning of the market.

What are profit maximization assumptions?

It corresponds to the theory that the main purpose of a company is the maximization of profits, with decision making based on this purpose, identifying the best market opportunities and the strategy associated with this objective.

By developing a profit maximization strategy, companies become more competitive and aligned with demand and its characteristics, making the offer balanced, with the allocation of resources necessary for effective fulfillment of demand.

Therefore, the balance of supply and demand helps in sustainable production and pricing, developing the economy and the global market.

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