The economic theory of the firm assumes that the principle o

The economic theory of the firm assumes that the principle objective of a firm is to maximize profits. However, there are other goals that a firm may pursue such as maximizing return on investment, maximizing price of company\'s stock, maximizing market share. These different objectives may lend to different managerial decision making, given the same limited resources. Are these other objectives necessarily inconsistent with the neoclassical objective of the firm?

Solution

Other objectives that are necessarily inconsistent with the neoclassical objective of the firm may include:-

1) Environmental objectives:- To Protect the environment.

2) Cultural objectives:- To Promote cultural values.

3) Social objectives:- To help in the development of society as whole and promote sustainable development.

4) To build corporate image in long run by providing quality products at a reasonable price.