MANAGEMENT

Detailed explanation-1: -Profit maximization objective is a little vague in terms of returns achieved by a firm in different time period. The time value of money is often ignored when measuring profit. It leads to uncertainty of returns. Two firms which use same technology and same factors of production may eventually earn different returns.

Detailed explanation-2: -Profit maximisation objective may lead to social inequalities. The rich will become more rich at the cost of economically weaker sections of society. Social inequalities will widen with the passage of time. After all, profits will be increased by exploiting some section or the other.

Detailed explanation-3: -(i) Profit maximization leads to exploiting workers and consumers. (ii) Profit maximization creates immoral practices such as corrupt practice, unfair trade practice, etc. (iii) Profit maximization objectives leads to inequalities among the sake holders such as customers, suppliers, public shareholders, etc.

Detailed explanation-4: -(d) It ignores the society The profit maximization concept doesn’t consider the benefit of society; it is only related to the profit. It ignores the workers, shareholders, consumers and growth of the society.

Detailed explanation-5: -Criticism of wealth maximization It is a prescriptive idea. The objective is not descriptive of what the firm actually does. The objective of wealth maximization is not necessarily socially desirable.