According to Robin Marris, managers attempt to maximise a firm’s balanced growth rate, subject to managerial and financial constraints.
Marris defines firm’s balanced growth rate (G) as:
G = GD = GC
where GD and GC are growth rate of demand for the firm’s product and growth rate of capital supply to the firm, respectively.
Simply stated, a firm’s growth rate is said to be balanced when demand for its product and supply of capital to the firm increase at the same rate. Marris translated these two growth rates into two utility functions: (i) manager’s utility function (Um), and (ii) business owner’s utility function (Uo), where:
Um = f(salary, power, job security, prestige, status)
Uo = f(output, capital, market-share, profit, public esteem).
The maximisation of business owner’s utility (Uo) implies maximisation of demand for the firm’s product or growth of the supply of capital.
marto answered the question on April 17, 2019 at 05:47
- Discuss the the minimisation rule.(Solved)
Discuss the the minimisation rule.
Date posted: April 17, 2019. Answers (1)
- Define the optimum level of output.(Solved)
Define the optimum level of output.
Date posted: April 17, 2019. Answers (1)
- Outline the importance of Knowledge of the optimum size of a firm.(Solved)
Outline the importance of Knowledge of the optimum size of a firm.
Date posted: April 17, 2019. Answers (1)
- Outline the reasons for setting a reasonable profit.(Solved)
Outline the reasons for setting a reasonable profit.
Date posted: April 17, 2019. Answers (1)
- What is the formula for profit-maximising conditions.(Solved)
What is the formula for profit-maximising conditions.
Date posted: April 17, 2019. Answers (1)
- Discuss the conditions for profit Maximization.(Solved)
Discuss the conditions for profit Maximization.
Date posted: April 17, 2019. Answers (1)
- Define profit with illustration.(Solved)
Define profit with illustration.
Date posted: April 17, 2019. Answers (1)
- List the limitations of Total Revenue - Total Cost Approach(Solved)
List the limitations of Total Revenue - Total Cost Approach.
Date posted: April 16, 2019. Answers (1)
- Explain Total Revenue - Total Cost Approach(Solved)
Explain Total Revenue - Total Cost Approach.
Date posted: April 16, 2019. Answers (1)
- Define the term equilibrium of a firm(Solved)
Define the term equilibrium of a firm.
Date posted: April 16, 2019. Answers (1)
- List the assumptions of the Theory of a Firm.(Solved)
List the assumptions of the Theory of a Firm.
Date posted: April 16, 2019. Answers (1)
- List the fundamental proposition for the Theory of a Firm.(Solved)
List the fundamental proposition for the Theory of a Firm.
Date posted: April 16, 2019. Answers (1)
- What is a firm?(Solved)
Define a firm.
Date posted: April 16, 2019. Answers (1)
- When do all the firms in a competitive industry achieve long run equilibrium?(Solved)
When do all the firms in a competitive industry achieve long run equilibrium?
Date posted: April 16, 2019. Answers (1)
- With the aid of a graph,show the short run profit maximizing position of a purely competitive firm.(Solved)
With the aid of a graph,show the short run profit maximizing position of a purely competitive firm.
Date posted: April 16, 2019. Answers (1)
- Explain the Equilibrium of a Competitive Firm.(Solved)
Explain the Equilibrium of a Competitive Firm.
Date posted: April 16, 2019. Answers (1)
- What is the importance of the law of variable proportions(Solved)
What is the importance of the law of variable proportions.
Date posted: April 16, 2019. Answers (1)
- What are the three phases or stages of production, as determined by the law of variable proportions?(Solved)
What are the three phases or stages of production, as determined by the law of variable proportions?
Date posted: April 16, 2019. Answers (1)
- Explain the Law of diminishing returns and the three stages of production.(Solved)
Explain the Law of diminishing returns and the three stages of production.
Date posted: April 16, 2019. Answers (1)
- List the assumptions of the law of variable proportions also called the law of diminishing returns.(Solved)
List the assumptions of the law of variable proportions also called the law of diminishing returns.
Date posted: April 16, 2019. Answers (1)