Tag - firm.

How far is profit maximization the basic objective of a firm ? What are the reasons for limiting profit ?

Ans. The fundamental objective for the existence of a business organization is to create value for the shareholders. The key shareholders of any firm are its owners. The owners want to maximize their wealth by availing profitable business opportunities. Thus, maximization of profits is [...]

Describe the various behavioural theories of the firm.

Ans. Behavioural theories see firm as it is engaged in non-maximizing  behaviour. According to behavioural theories, the firm's sub-optimal behavior arises from uncertainty and conflicting goals of various groups within the  firm. The analysis of organization of the firm is done with the help [...]

Classify the managerial theories of firm and discuss each in brief.

Ans. Managerial theories may be broadly classified into three categories (i) Sales revenue maximization model by Bamoul (ii) Managerial utility models (iii) Growth maximization models. (i) Bamoul's Sales Revenue Maximizing Model-The digopolistic firms aim at maximizing their sales revenue. The main reasons for this are as follows (a) Health [...]

Explain briefly the objectives of the firm.

Ans. Some objectives of the firm are given below- (i) Sales Maximisation- Sales maximisation objective popularizes the product and boosts the morale of the employees. It is needed for operational efficiency and profits, subject to the limitation that costs incurred are covered plus a usual [...]

Write a short note on ‘theory of the firm’. Or Write in brief about the theory of firm.

Ans. The 'theory of firm' has been developed on the basis of the assumption that rational. firms pursue the objective of profit maximization, subject to the technical and market constraints. The basic components of the theory of firm are as follows - (i) Firm always [...]

Explain fully the theory of cost as applied to a manufacturing firm. Or How the theory of cost is established ? Or Write short note on theory of the cost. Or Explain the theory of cost.

Ans. Determinants of a Cost Function - There are many factors which affect the cost. Cost function expresses the relationship between cost and its determinants, such as the size of plant, level of output, input prices, technology etc. It can be expressed in the [...]