Maximization of long run profits: according to some economists, short run profit maximization does notnecessarily result in profit maximization in the long run. A firm attempting to equate MC and MR ineach period may not succeed in maximizing the profit in the long period. Thought they may notmaximize their profits in each period, every firm may try to maximize profits at least in the long run.This objective is attained by equating the price to average cost.
Sales revenue maximization:
W J Baumol is of the view that a modern business firm aims at salesrevenue maximization rather than profit maximization.1.
Top managers are interested in maximizing their own earning which they have learnt throughtheir experience is possible by maximizing sales rather than profits.2.
When a firm enhances the prestige of the managers while large profits are shared by the shareholders3.
Banks and other financial institutions are far more impressed by the turn over of the firms andare willing to provide finance to firms whose sales record is impressive in terms of the size of the sales.4.
In a competitive world, firms with large and growing sales have an edge over (better than)firms with low sales turn over. Such firms with huge sales can tackle their personal problemssatisfactorily.5.
Managers now-a-days are not interested in showing results in terms of spectacular profitsbecause if in the future they fail to maintain the high level of profit they will find themselvesin trouble.TR/TC R R1 TCTRANTO Q M M1 outputTPTM1 is minimum profit less than profit ON. At OM, TR is maximum at RM. OM is the maximum salesoutput which is higher than the profit maximizing output OQ>Therefore
sales maximization output is larger than profit maximization output. The firm’s behavior is
rational as it aims at minimum profit with maximum sales