sales
profit
income
None of these
Answer is Right!
Answer is Wrong!
The correct answer is: A. sales
Baumol suggested that firms may maximize sales rather than profits. This is because sales are easier to measure and control than profits. Additionally, maximizing sales can lead to increased market share and power, which can be beneficial to firms in the long run.
However, maximizing sales can also lead to a number of problems, such as increased costs, decreased efficiency, and lower quality products. As a result, it is important for firms to carefully consider the costs and benefits of maximizing sales before making a decision about whether or not to pursue this objective.
Here is a brief explanation of each option:
- B. profit – Profit is the difference between a firm’s revenue and its costs. It is a measure of a firm’s financial performance. Firms typically seek to maximize profits, as this is the best way to increase shareholder value.
- C. income – Income is a measure of a firm’s total revenue. It is calculated by adding up all of the firm’s sales. Income is not the same as profit, as it does not take into account the firm’s costs.
- D. None of these – None of these options are correct. Baumol suggested that firms may maximize sales rather than profits.