Question

How do companies today reconcile profit maximization with corporate social responsibility?

-The complete cost-benefit analysis to identify actions that will maximize profits while satisfying the demand for corporate social responsibility.
-They focus on profit maximization regardless of the impact on social performance.
-The assumption is that the socially responsible actions within organizations always improve corporate profits

Answer 1

Companies reconcile profit maximization with corporate social responsibility by following the principle of allocative efficiency.

Step-by-step explanation:

In today's business environment, companies strive to reconcile profit maximization with corporate social responsibility by following the principle of allocative efficiency. Allocative efficiency ensures that the benefits to consumers, as measured by the price they are willing to pay (P), are equal to the costs to society of producing the marginal units (MC). This means that when a profit-maximizing firm produces at the quantity where P = MC, it not only maximizes its profits but also aligns its actions with the demand for corporate social responsibility.