| 单词 | profit maximization |
| 释义 | profit maximization The aim of making as much profit as possible for a business. This is a slogan which raises many questions. Over what time horizon are profits to be maximized? There is liable to be a conflict between short-run profits and long-run growth. If the aim is maximizing the present discounted value of all future profits, what is the right discount rate to use? Profit maximization is a sensible objective only if the owners are risk-neutral: there is normally a trade-off to be made between risks and mean expected profits. Also, the directors or owners may have their own objectives: these range from desire for an easy life, a large empire, or jobs for their relatives, to a reputation as patrons of the arts, sport, or the environment. All these have to be traded off against profits. Other things being equal, however, businesses prefer higher profits to lower, as these allow directors more scope to pursue any aim. Finally, behaviourist critics argue that maximization itself is made impossible by lack of information and attention-span: actual businesses are run by satisficing. |
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