ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In conventional theory, profit maximisation is the main objective of firms. However, many firms may have other objectives like sales maximisation, surviving in the market, revenue maximisation, among others.

Detailed explanation-2: -In the conventional theory of the firm, the principal objective of a business firm is profit maximisation. Under the assumptions of given tastes and technology, price and output of a given product under perfect competition are determined with the sole objective of maximising profits.

Detailed explanation-3: -For these reasons, profit strategies are only one of a wide variety of goals businesses pursue. These objectives can include keeping customers returning, dealing with competitors, retaining employees, risk management and meeting legal obligations.

Detailed explanation-4: -If profit maximization is the ultimate goal of the firm, they will look into the total profit that often tend managers to take wrong decisions while investing. It happens because they believe that profit maximization is the ultimate goal.