Back to the full dot-point answer
SingaporeEconomicsQuick questions
Firms, Production and Costs
Quick questions on The goals of firms explained: O-Level Economics
2short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the usual assumption?Show answer
Economists usually assume that firms aim to maximise profit, that is, to make the largest possible gap between total revenue and total cost. Profit is the reward to the entrepreneur for taking risk, and it provides the funds to invest and grow. This assumption is a useful starting point because it predicts firm behaviour well in many cases.
What is other goals firms may pursue?Show answer
In practice, firms may pursue other goals, especially when owners and managers are different people:
Have a question we have not covered?
This dot-point answer is short enough that we have not extracted many short questions yet. Read the full dot-point answer or ask Mo, our study assistant, in the chat for follow ups.