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Essay / Research Paper Abstract
This 8 page paper looks at the way that the idea and model of profit maximization has evolved since the first half of the twentieth century. Concepts discussed include, but are not limited to economic Darwinism, growth models, revenue maximization and the technostructure. The bibliography cites 4 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEprofitmax.rtf
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Unformatted sample text from the term paper:
service. The way in which firms are assumed to work has often been assumed to be under a profit maximization model, using the resources that they have in a way
to maximize the profits that they make. However, over the last seventy years the environment has changed, economic theory has evolved as the commercial environment has become complex.
Theories regarding the aims of business have moved on, from the concept of profit maximization to take into to account the influence of business managers
with the theories of Berle and Mean, as well as the way commercial interests maybe served by other goals to sustain the business, such as revenue maximization rather than profit
maximization, as seen with the work of Baumol and Williamson and in the 1960s the theory of the technostructure emerged, these may be seen as an emergence leading away
from the profit maximization model, but profit is still important, with the capitalist economic model and shareholders demanding return there is still the need for profit creation and shareholder may
argue for profit maximization. This paper will look at the evolution of some of the ideas that impacted on the view of the firm as a profit maximizing entity.
The concept of the firm to maximize profits may appear to be the most likely role of a firm, and can be linked to the ideas of
Darwin. When Darwin developed his theory of evolution he described it as the survival of the fittest. Economic Darwinism may be seen as the equivalent in the commercial world, where
to survive a company has to make a profit. However just as organisms and creature in nature may be competed for limited resources, the businesses are competed for limited custom.
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