Which of the following statements concerning a firm's quest to maximize wealth is correct?
A)In extremely competitive industries, we would expect firms would voluntarily engage in many socially beneficial projects to try to maximize their stocks' values.
B)Actions that maximize a firm's stock price are inconsistent with maximizing social welfare.
C)The concepts of social responsibility and ethical responsibility on the part of corporations are completely different and neither is relevant in maximizing stock price.
D)In a competitive market, if a group of firms does not spend resources making social welfare improvements, but another group does, in general, this will not affect the second group's ability to attract funds.
E)If the government did not mandate socially responsible corporate actions, such as those relating to product safety and fair hiring practices, most firms in competitive markets probably would not pursue such policies voluntarily.

Question

Quizplus · Accepted Answer

This statement is consistent with the idea that a firm's primary goal is to maximize shareholder wealth. Without government regulations mandating socially responsible practices, firms in competitive markets may not voluntarily pursue such policies as they may see it as a disadvantage in competing for market share and attracting funds.

Which of the Following Statements Concerning a Firm's Quest to Maximize