Why assume that firms maximize profit, when it is easy to find companies that pursue other goals such as saving rain forests (Ben and Jerry's) and sponsoring Mister Rogers (Sears)?
Assuming that the two cited firms are not pursuing maximum profit (and that is not certain, since good PR may be a profit-maximizing tool), profit maximization is useful as a simplification of reality. We can learn much about the way firms operate, even if they do not behave this way all the time. Secondly, even nonprofit firms must pay attention to the bottom line. It is worthwhile for them to know how much profit is forgone if they choose a goal other than profit maximization.
You might also like to view...
A country's production possibilites increase because the available workers become more skilled at using a computer. This is an example of growth caused by:
a) global resources b) physical capital c) technology d) production opportunity
Which organization determines procedures for the settlement of international trade disputes?
A) World Bank B) World Trade Organization C) International Monetary Organization D) International Bank for Reconstruction and Development E) The League of Nations