SAMPLE ANSWER FOR QUESTION 5 Profit-making is one of the most traditional‚ basic and major objectives of a firm. Profit-motive is the driving-force behind all business activities of a company. It is the primary measure of success or failure of a firm in the market. Profit earning capacity indicates the position‚ performance and status of a firm in the market. In spite of several changes and development of several alternative objectives‚ profit maximization has remained as one of the single most important
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1. What is Profit Maximization using TR-TC Approach? Profit Maximization using TR-TC Approach is a method in determining the Profit and the Loss of a certain Company. To obtain the profit maximizing output quantity‚ we start by recognizing that profit is equal to total revenue (TR) minus total cost (TC). Given a table of costs and revenues at each quantity‚ we can either compute equations or plot the data directly on a graph. (Lipsey‚ 2011) Figure 1.Illustration of Profit Maximization using TR-TC
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economics of a profit maximizing firm Neoclassical model of the firm states that organization will have the main objective of maximizing its profit within a given period of time. Maximum profit was achieved at the output at which marginal cost is equal marginal revenue. There are several factors which need to be considered when talking about the profit maximizing firm: 1. The assumption of the profit maximizing firm is that there is no segregation between managers and owners of the firm. Owners economically
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Wealth Maximization Concepts Worksheet University of Phoenix August 8‚ 2008 Maximizing Shareholder Wealth- MBA/540r4 Wealth Maximization Concepts Worksheet Concept Application of Concept in the Scenario Reference to Concept in Reading Definitions of Wealth Maximization Bernard Lester is CEO and founder of Lester Electronics the public Lester Electronics‚ Inc. which earns $500 million annually. In 1984‚ Bernard took his company public‚ and it is now traded on
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Marginal Analysis and Profit Maximization Task A At the point of profit maximization within any firm‚ the aspects of both marginal revenue and marginal cost play a major role. The economically working definition of marginal revenue is termed as: the extra revenue that an additional unit of product will bring. It is the additional income from selling one more unit of a good; sometimes equal to price (MoneyTerms‚ 2005). The marginal revenue of the output of any given product ties closely in the
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"Fin/370 Final Exam One Of Them" from Anti Essays‚ your source for free research papers‚ essays‚ and term paper examples. 1. The goal of the firm should be the maximization of profit. (True/False) TRUE It should be FALSE. The goal of the firm should be maximization of shareholder wealth. 2. For the risk-averse financial manager‚ the more risky a given course of action‚ the higher the expected return must be. (True/False) TRUE 3. The corporation is
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Alternative theories to profit maximization ranging from perfect competition to strict monopolies. Companies and The Market Most companies are profit oriented. Companies survive and live on profit. Even governmental institutions‚ NGO’s and NPO’s are profit oriented‚ what they do with profit is different though. Saying this means that companies seek always to be at a position where profit is maximized. As we know by now this happens when MC=MR but this is an always changing point as supply and
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Profit maximization and competitive supply * Perfectly competitive markets(pasaran persaingan sempurna) Definisi: pasaran persaingan sempurna(pps) merupakan satu bentuk pasaran yang mengandungi ramai penjual dan ramai pembeli yang menjalankan urusniaga ke atas barang yang bersifat homogen(sama@hampir sama) pada satu tingkat harga yang telah ditetapkan dalam pasaran. Disebabkan sifat barang mereka yang homogeny‚ maka kereka tidak melakukan persaingan bukan harga.cth: iklan&kualiti produk
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Sales Maximization A reasonable‚ and often pursued objective of firms is to maximize sales‚ that is‚ to sell as much output as possible. Clearly sales lead to revenue‚ meaning that maximizing sales is also bound to maximize revenue. But as the analysis of short-run production indicates‚ maximizing sales does NOT necessarily maximize profit. So why do firms do it? Are firms unreasonable? Are they irrational? Do they NOT understand the basic economic principles of short-run production? For some firms
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BACKGROUND OF STUDY The owner or shareholder of any business expect their investment to earn a return that reward is expected to be commensurate with the perceived riskiness of the investment. There are many alternative vehicles for the investment of capital‚ so a particular investment often be said to carry an opportunity cost. This is the difference between the actual return forgone from the alternative investment‚ olowe (1997) noted that the maximization of shareholders wealth is the most superior of all
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