Final answer:
The primary focus of managers, from an owner's perspective, should be profit maximization, as it involves increasing revenue while effectively managing costs to ensure the highest possible profit margin. This involves producing where marginal revenue equals marginal cost.
Step-by-step explanation:
From the perspective of a company's owner, the primary focus of managers should typically be profit maximization. This encompasses ensuring that the firm is not only increasing its revenue but also managing costs effectively to maximize the difference between revenue and cost, also known as profit. Although minimizing the Cost of Goods Sold (COGS) and aiming for revenue maximization can be part of the strategy, they should serve the overarching goal of profit maximization.
Profit maximization involves analyzing various measures, including marginal revenue and marginal cost, to determine the most profitable level of output. Producing where marginal revenue equals marginal cost will lead to maximizing profits, as any deviation from this point means either leaving money on the table (if marginal cost is lower than marginal revenue) or incurring losses on additional units produced (if marginal cost is higher than marginal revenue).
The concept of profit can be simply defined as Profit = Total Revenue - Total Cost. An owner needs to understand this as it guides decision-making, production levels, and pricing strategies, ultimately affecting the long-term success of a firm.