The profit-maximization assumption of economic theory does not fit reality because:
A) all real firms want to maximize long-term profits rather than short-run profits.
B) all real firms want to maximize their share of the market.
C) real-world firms have a single goal, but this goal has nothing to do with profits.
D) real-world firms have many goals, which depend on the incentive structure incorporated into the firm's organization.

Question

Quizplus · Accepted Answer

Real-world firms often have multiple goals, including profit maximization, market share, growth, and sustainability, influenced by their organizational structure and incentives.

The Profit-Maximization Assumption of Economic Theory Does Not Fit Reality