Firms are in business for a simple reason: To make money. Traditional economic theory suggests that firms make their decisions on supply and output on the basis of profit maximisation. However many Economists and managerial Scientists in our days question that the sole aim of a firm is the maximisation of profits. The most serious critique on the theory of the firm comes from those who question whether firms even make an effort to maximise …showed first 75 words of 1230 total…

…showed last 75 words of 1230 total…Begg D., Fischer S. & Dornbusch R. (1994) Economics 4th. Ed. Sloman J., (1994) Economics 2nd Ed. De Meza D. & Lockwood B. (1998) Does Asset Ownership always motivate Managers? Outside Options and the Property Rights Theory of the Firm. Quarterly Journal of Economics Vol. CXIII (2) Rajan R.G. & Zingales L. (1998) Power in a Theory of the Firm. Quarterly Journal of Economics Vol. CXIII (2) Putterman L. & Kroszner R.S. –editors- (1996) The economic nature of the Firm – a reader 2nd edition