Question

In: Economics

The goal of any firm has been assumed to be to:


The goal of any firm has been assumed to be to: 

 none of the above 

 maximize the difference between marginal revenue and marginal cost. 

 produce at the socially optimal level of output.

 choose that level of output which will minimize its variable costs.

 choose that level of output which will maximize its total revenues

Solutions

Expert Solution

Goal of any firm would be profit-maximizing level of output production where it can maximize profitsthis can be possible when it is producing at a level where the marginal revenue equals the marginal cost and this is because marginal revenue is decreasing curve and marginal cost is increasing curve and it will obtain profits only till both curves meet

Therefore (a) none of the above is the answer

Because minimising cost is not the main objective but maximizing profit is and similar to that of maximum revenue where maximum revenue is not the main objective but maximizing profit and if you maximize the difference between marginal revenue and marginal cost the prophets will move away from the maximum profit level and the socially optimal level of output is not decided by the firm but the private optimal level is desired to be produced

Therefore (b,c,d,e) are wrong


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