Question

Economists normally assume that the goal of a firm is to

(i) make profit as large as possible even if it means reducing output.
(ii) make profit as large as possible even if it means incurring a higher total cost.
(iii) make revenue as large as possible.
a. (i) and (iii) are true.
b. (i) and (ii) are true.
c. (i), (ii), and (iii) are true.
d. (ii) and (iii) are true.

Answer 1

(i) and (ii) are true (option B)

Step-by-step explanation:

Firms always strive to make profits because they would be out of business if they don't make profits. Thus, they adopt many strategies in trying to make profits even if it means deliberately making a reduction in the quantity of goods or services produced in a given time period.

For example, a packet of biscuits that used to contain 300 pieces at a selling price of $1 can be reduced to 250 pieces (by the firm specializing in its production) and sold at the same $1 in order to keep making profit.

In addition, firms would love to make as much profit as they can even if it means running their businesses at a high cost because the profits realized would make up for cost expenses.

Answer 2

b. (i) and (ii) are true

Step-by-step explanation:

(i) make profit as large as possible even if it means reducing output

(ii) make profit as large as possible even if it means incurring a higher total cost