ECON 100-03 Homework 1

1. Briefly summarize Rubin’s arguments for why profit maximizing firms work to the
benefit of consumers:

Firstly, the most basic activity of profit maximizing companies is to minimize the production
cost of products with the highest return. Since the prices of products whose production costs
decrease will also decrease, this not only benefits the company but also benefits the
consumer.

Secondly, it is said in the text that products with high profit returns are products that are in
high demand but are produced less. Therefore, companies increasing the production of these
products by maximizing profits will meet the consumer's need for missing products.

Thirdly, the decrease in production costs in profit-maximizing companies will directly affect
the price of the product, and thus the consumer will be able to access the product he/she
wants at a lower price.

2. Give an example where profit motive leads firms to do bad things:

Some cosmetic companies have begun to use animal test subjects "extremely" to reduce
production costs, improve the features of the product and make more profit. Various and
very cruel procedures are performed on the animals used as test subjects. And the sole
purpose of these experiments is to increase business profits.

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