Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Chapter 17, Problem 7RQ
To determine
The reason for achieve objective other than profit maximization.
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Should the company also reduce price in order to maintain market share, or should the company maintain its current price?
how does the theory of the firm differ from short term profit - maximisation? why is the former superior to the latter?
Based on these answers, should James continue operating the company?
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Microeconomics (9th Edition) (Pearson Series in Economics)
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- How can a manager earn profit by exploiting market inefficiencies? What are some common tactics?arrow_forwardWhat is the principal-agent problem? Have you ever worked in a setting where this problem has arisen? If so, do you think increased monitoring would have eliminated the problem? Why don’t firms simply hire more supervisors to eliminate shirking?arrow_forwardThe salmon fishery on Vancouver Island has historically been one of the world’s richest. Over the past few years, poor returns of salmon to the island and competition from farm-raised salmon have reduced the profit realized by the fishermen. One response to lower revenues has been for fishermen to use family members instead of hiring crew “in order to reduce their costs.” What do you think about this business strategy? Will employing relatives really keep profits from falling? Under what conditions will this a good strategy?arrow_forward
- Suppose that a local electrical utility firm was split into five firms of equal size. What do you expect about electricity prices? write you details.arrow_forwardThe SCORE framework espoused in the article entitled "The Board's Role in Sustainability" recommends each of the following to achieve board-of- director buy-in of a company's sustainability initiatives, except: O articulating a simple and clear statement of purpose. taking "ownership" of the company's stated purpose. basing compensation systems on metrics that reflect purpose, not just profits. O recognizing that ultimately the firm has a fiducary responsibility to put shareholders' interests above all other.arrow_forwardDo you agree with this statement? Why?arrow_forward
- b) Besides profit maximization, an Islamic firm (Muslim Entrepreneur) is supposed to take into account the welfare of the society in his business decision. Elaborate on the statement.arrow_forwardAccording to Theodore Levitt, in terms of an organization's business, railroads lost market share in the 20th century because they had less flexible routes than trucking. defined their business too narrowly. tried to create a business that appealed equally to all people. priced their services too high. were simply an outmoded form of transnortatinarrow_forwardWhich of the following is true of profits and losses? Profits direct entrepreneurs toward production of goods that are highly valued relative to their cost, while losses direct them away from wealth-reducing activities. Profits indicate that the firm is charging prices that are too high, while losses indicate that the firm needs to raise its prices. Profits indicate that the consumer is getting a bad deal, while losses indicate that the consumer values the product highly relative to its cost. Profits indicate that the suppliers of resources are underpaid, while losses indicate they are overpaid.arrow_forward
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