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Classical economic theory assumes that firms will seek to maximise profits and will therefore produce where MC equals MR. Although most economists would argue that this is a fair enough assumption to make, particularly when trying to model real world behaviour, some economists believe that it is an unrealistic assumption.
They argue that in the real world, firms have a wide variety of objectives, many of which do not involve the maximisation of profits. Social enterprises such as the “Big Issue” do not aim to maximise profits but aim to further their social objectives. However, it could be argued that to effectively meet their social objectives these firms need to make profits.
queen babito answered the question on July 9, 2018 at 11:44
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