The economic theory of the firm assumes that the principle objective of a firm is to maximize profits. However, there are other goals that a firm may pursue such as maximizing return on investment, maximizing price of company’s stock, maximizing market sh
The economic theory of the firm assumes that the principle objective of a firm is to maximize profits. However, there are other goals that a firm may pursue such as maximizing return on investment, maximizing price of company’s stock, maximizing market share. These different objectives may lend to different managerial decision making, given the same limited resources. Are these other objectives necessarily inconsistent with the neoclassical objective of the firm?
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