Equilibrium in tile Long-Run

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Equilibrium in tile Long-Run The long-fill is a period of time long enough tu permit changes in the variable as well as in the fixed factors. In the long run, accordingly, all fat.:tor~ arc variable and none fixed. Thus, in the lung-run, firms can change their output by increasing their fixed equipment. They can enlarge the old plants or replace them […]

Conditions of Equilibrium .

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Conditions of Equilibrium . Under perfect competition. as explained earlier, price for all individual finn is even. It cannot influence the price by its own action. It works under the assumption that it can sell as much as it likes, at the prevailing price. Therefore, the demand curve or average revenue curve fairing a linn under perfect competition is )elastic […]

EQUILIBRIUM OF FIRM AND INDUSTRY UNDER PERFECT COMPETITION

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EQUILIBRIUM OF FIRM AND INDUSTRY UNDER PERFECT COMPETITION  In the previous chapter, we have discussed in detail the conditions of equilibrium or a firm and industry, As mentioned earlier, our analysis in regard to thc equilibrium in the last general terms and nut with reference to any particular market form, ow III the I rc cnt chapter, we shall discuss […]

Utility Maximization

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Utility Maximization There are economists like Denjaminlliggins, Melvin Redder and Tibor Scitovsky who say that maximization of satisfaction or utility is the over-riding consideration which governs businessman’s behaviour. This goal is also called l’rcfc cnce Function  These economists point out that profit maximization docs not necessarily result in maximization of satisfaction. In their view, we should not only consider the satisfaction that […]

Sales Maximization

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Sales Maximization The sales maximization hypothesis has been put forward by Professor 8aumol. In his view, maximization of sales rather than the maximization of profits the ultimate objective that the entrepreneur pursues. He says that sales have become an end of themselves and not merely as a means to further other objectives like operational efficiency and profits. Baumel, therefore, regards sales maximization […]

Full Cost Pricing Principle

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Full Cost Pricing Principle For many years, Chamberlin ‘s and Joan Robinson’s price theory of monopolistic competition had come to be generally accepted. According to This theory, the firms were able to act atomistically on the principle of profit maximisation without fear of rivals’ reactions. They fixed prices so as to maximise their profits and this they did by equating marginal […]

Conclusion

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Conclusion Profit maximisation maxim is unrealistic since it is difficult of calculation and not very ethical to pursue. Marginal analysis as a tool of profit maximisation is a valid technique for selecting the most efficient technique out of the various alternatives available, where the alternatives can be fairly clearly specified and where it is possible to estimate costs and revenue reasonably well. […]

Arguments Against

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Arguments Against Those who question the validity of the profit maximization postulate put forward the following arguments:- (i) Enlightened businessmen vehemently deny that their object is to maximise profits. Service of society rather than personal profit is said to be their aim. (ii) The profit-maximisation doctrine Would be the rule, if business decisions were taken by th who arc to get the […]

Arguments For

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Arguments For The following arguments are put forward to show that the assumption of profit maximisation is amply borne business behaviour  The businessmen sometimes assert that it is t!Jelr business to look after social welfare, rather than personal gain. Thus, the actual behaviour of businessmen is in accord with profit maximisation doctrine. (;;) The postulate of profit maximisation certainly applies to industries and it […]

Meaning of Profit

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Meaning of Profit We usually define profit in Economics as a reward for enterprise or for risk-taking or uncertainty bearing. But this definition docs not lend itself to any quantitative interpretation to enable us to settle the issue.  There are two technical difficulties in interpreting the concept of profit maximisation: First difficulty relateS to the time dimension. A businessman is said […]