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7.8 Differing Objectives and Policies of Firms
Homearrow_rightRevision Notes arrow_right A Level arrow_right The Price System And The Microeconomy arrow_right Differing Objectives And Policies Of Firms
7.8.1 Traditional profit-maximising objective of firms

Traditional theory assumes firms aim to maximise profit, producing where MR = MC (with MC cutting MR from below). If MR > MC, producing one more unit adds more to revenue than to cost, so profit rises; if MR < MC, profit falls. Profit maximisation rewards owners, funds investment, and signals where resources should go.

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