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fgiga [73]
1 year ago
14

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

tem
Business
1 answer:
jasenka [17]1 year ago
4 0

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.

<h3 /><h3>What are profit maximization assumptions?</h3>

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.

Find out more about profit maximization here:

brainly.com/question/13464288

#SPJ1

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3 years ago
In a homogeneous-good Cornet model where each of the n firms has a constant marginal cost m and the market demand curve is p = a
Jlenok [28]

Answer:

Q=nq=\frac{n}{n+1}\frac{a-c}{b}

if n=1 (monopoly) we have Q^M=\frac{1}{2}\frac{a-c}{b}

if n goes to infinity (approaching competitive level), we get the competition quantity that would be Q^c=\frac{a-c}{b}

Explanation:

In the case of a homogeneous-good Cournot model we have that firm i will solve the following profit maximizing problem

Max_{q_i} \,\, \Pi_i=(a-b(\sum_{i=1}^n q_i)-m)q_i

from the FPC we have that

a-b\sum_{i=1}^n q_i -m -b q_i=0

q_i=\frac{a-b \sum_{i=2}^n q_i-m}{2b}

since all firms are homogeneous this means that q_i=q \forall i

then q=\frac{a-b (n-1) q-m}{2b}=\frac{a-m}{(n+1)b}

the industry output is then

Q=nq=\frac{n}{n+1}\frac{a-c}{b}

if n=1 (monopoly) we have Q^M=\frac{1}{2}\frac{a-c}{b}

if n goes to infinity (approaching competitive level), we get the competition quantity that would be Q^c=\frac{a-c}{b}

7 0
3 years ago
In order to create a budget, you should _____.
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A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the
Irina-Kira [14]

Answer:

A. Lowest Total Cost:

A. 315,550 or more

B. Lowest total cost of annual volume of 120 boats

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The lowest total cost among the three alternatives is b.

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If the company Subcontracts then Total cost per boat is $2,620

If a company goes for expanding existing facility then it will incur fixed cost of $57,000 and variable cost will be $1,030 per boat.

If company produces 315,000 or more boats then it will have lowest possible cost for the boat.

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