Chapter 8.2: Profit Maximization

Smaller firms

managed by their owners, profit is likely to dominate almost all decisions.

Larger firms

managers who make day-to-day decisions usually have little contact with the owners (i.e., the stockholders). As a result, owners cannot monitor the managers’ behavior on a regular basis. Managers then have some leeway in how they run the firm and can deviate from profit-maximizing behavior.

not likely

firms that do not come close to maximizing profit are ___ to survive.

do survive

Firms that ___ in competitive industries make long-run profit maximization one of their highest priorities.

Cooperative

an association of businesses or people jointly owned and operated by members for mutual benefit.

Condominium

is a housing unit (an apartment, connected town house, or other form of real estate) that is individually owned, while use of and access to common facilities such as hallways, heating system, elevators, and exterior areas are controlled jointly by an association of condo owners.