This is a fundamentally important concept in understanding production decisions. As ever, Tutor2U has produced a brilliant summary:
Here is your first A2 level essay question:
“Evaluate whether profit maximisation is always the most important objective of firms.”(25 marks)
Deadline: Weds 23rd September
You’ll need to make sure you have done some wider research and reading to answer this question well. Remember that evaluation is critical, so take care with how you structure your answer and develop your points.
We often assume that all firms exist to make as much profit as possible. Indeed, that is an underlying principle of economics. But is that really the case, and what really is profit?
Read this study note and summarise the main issues briefly.