Firms as agents of a market economy play a significant role in combining resources to produce goods and services demanded by the household sector. The fact that most economic transactions take place between firms as reasonably complete productive entities rather than between separate single-person (and perhaps single-activity) units legitimises firms’ existence in their modern generic form: with a division of labour, management and ownership. This is partly explained by the theory of transaction costs whereby firms, as opposed to separate individuals, are considered more economically efficient as their activities would involve less instances of economic exchange and could involve multiple sources of capital, labour and technologies of production. Although there are sound reasons for firms to exist as such, must they behave in a particularly predefined way – one that would maximise profits – in order to survive as market agents?
Maximising profits, which would......

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Title: Is It The Case The Firms Must Maximise Profits In Order To Survive?
Approximate Word Count: 524
Approximate Pages: 3 (250 words per double-spaced page)

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