If there is anything na pinaka tumatak sa akin after reading the materials and watching the videos.

It is
that the main goal of the the business is to maximize profit. (SALES REVEMUE MINUS COSTS) According
nga po sa theory of the firm, people are directly involve as well as the society in the business activities.
That is why the role of managers is to maximize the profits with the consideration of a lot of things. Also
po yung business, mas makakabuti if what the managers will look ahead is yung long term life ng
business. Because we have what we called the value of the firm, ito po yung present value of the firms
expected future cash flows. So even if maliit lang ang net cash flows, there is still a tendency na iun the
near future is lalaki pa pop ang value of the firm.

However meron din pong limitations ang theory of the firm, what the managers need to do is optimize
results and not only settle for one. Meron din problem when comes to managers when sometimes what
they seek is their own interest which is unfriendly to the business. That is why important po na if nalaki
ang kita ng company na coocmpensate din ng maganda ang managers kase ibig sabihin nito ay maganda
ang performance ng manager. COST BENEFIT ANALYSIS

Why Do Profits Vary Among Firms

1. Disequilibrium Profit Theories

a. Frictional Profit Theory-unanticipated changes in demand or cost condition

Monopoly Profit Theory-sheltered from competition by high barriers to entry. THEYR WERE ABLE TO
MONOPOLIZED MERALCO

Compensatory Profit Theories

a. Innovation Profit Theory- arise following successful invention or modernization; iphone

b. Compensatory Profit Theory- reward for firm for extraordinary success in meeting needs