Economics Essays

In order to answer, one should consider the benefits of profit maximisation. These may include: satisfying shareholders, using money for savings in order to stay afloat, reinvesting profits into technology (among others). In addition, one should also consider alternative objectives which major businesses instead employ, such as sales maximisation (this is Amazon’s stated goal)or revenue maximisation, as well as possible negatives of profit maximisation (company reputation).It is important, to gain top grades, to evaluate each side. An important evaluative point in this instance is that even if maximising profits may be the stated objective of a business, it may not be entirely realistic: the principal agent problem may ultimately mean that there is a conflation in objectives between different agents in a firm. Furthermore, the long and short term should be considered. It is likely that in the long run a firm’s goal will always be profit maximisation, but in the short run, it may be more conducive for a business’ future standing to pursue sales maximisation, thereby increasing market share, enabling them to more easily later pursue profits. A good answer will additionally include diagrams for analysis, most fittingly when introducing concepts such as profit or sales maximisation.