Rationality of Business Economics

• Classically, firms have always been considered "profit-maximizers", meaning they will try to make as much profit as possible.
• They have been regarded in similar ways to econs, where they have perfect information, are unbiased and are fully rational.
• Instead of trying to maximize their own utility, firms have been thought of as trying to maximize their profits.

Profit Maximizing

• A possible objective of firms that involves producing the level of output where profits are greatest.
• The assumption of firms is that they are focused on profit maximization and will make all decisions based on profitability.

Alternative Objectives

• In reality, businesses typically have other objectives besides profit.
• These affect their decisions in ways that traditional economic models might not have predicted.

Corporate Social Responsibility

• When firms aim to create and maintain an ethical and environmentally responsible image.

Increasing Market Share & Growth

• A strategy to increase power in a market by increasing the amount of overall sales.

Satisficing

• A hybrid of the words "satisfy" and "suffice".
• This occurs when a firm strives to achieve several objectives rather than simply focusing on one.