Answer to Question #228895 in Microeconomics for KAT

Question

For an individual firm compare Marris’s Model of growth maximization with traditional model for profit maximization ?give explanation?

Answer 1

The traditional model for profit maximization

Under this model, it is assumed that an individual firms' primary objective is to maximize revenues and profits in the short-run period. 

The traditional model for profit maximization provides essential guidelines for the decision-making process by the individual firms concerning efficient management of limited resources.

Marris’s model of growth maximization

Under this model, individual firms’ goal is to maximize balanced growth rate of respective individual firms. The balanced growth rate is made up of demand growth of the individual firms’ products and the capital supply growth of the individual firm. Maximization of the balanced growth is faced by two that is financial constraints and managerial constraints. Managerial constraints are constraints set by the administrative team of the individual firms and the skills they hold. Financial constraints are occasioned by individual firms’ managers' desire to achieve maximum job security.