Question

Which of the following statements is TRUE? Economists normally assume that the goal of the firm is to: I. sell as much of their product as possible. II. set the price of their product as high as possible. III. maximize profit.

Answer 1

Answer:

III. maximize profit.

Explanation:

Profit maximisation is assumed to be the most important goal of most firms. Profit maximization means selling a product at the point where total revenue is at its greatest above total cost.

Profit is maximised where marginal cost equals marginal revenue.

I hope my answer helps you

Answer 2

Answer:

III. maximize profit.

Explanation:

In economics, profit maximization is one of the major goals of a business set up to make profit. Maximization of profit, which is the ultimate goal of business, according to economics is not mainly achieved by mere selling of as much product as possible, nor is it dependent solely by setting a higher price for such product.  

For profit maximization to be achieved in business, whether in the short or long run, the right price, right input and output levels that would yield optimal profit must be carefully determined. In order words, for a firm to maximize profit, it would determine to produce a product at the output level where the marginal revenue equals the marginal cost, or where the total revenue is at the greatest above the total cost.

According to the normal assumption of economists, maximization of profit is the major goal of a firm.