BUSINESS ETHICS ESSAY Being marked on quality of communication, demonstrated kno
ID: 365167 • Letter: B
Question
BUSINESS ETHICS ESSAY
Being marked on quality of communication, demonstrated knowledge and reasoning
Explain the following passage:
“Under the proper assumptions profit maximization is indeed efficient in the sense that it can achieve as high a level of satisfaction as possible for any one consumer without using more resources than society is endowed with.”
Do you agree with this statement? What are its implications? What are the limitations of this position? Use concrete examples to support your position.
Explanation / Answer
Personally speaking, I disagree with the statement.
Implications- Economic theory helps us to understand how the businesses act and it is based on the proper assumption of what actually motivates the business. Business is catering to all the customers and not just one. If only one customer receives a high level of satisfaction with using limited resources, then the business will not survive in the competing market. The end result would be that the business will not have any market share in the industry.
What are the limitations of this position? - The limitations are such that catering to one customer might limit the innovation of new products, reaching out to the target customers, optimum utilization of resources and having a good workforce.
Example- Apple is the most preferred brand globally. If the brand caters to only one customer to achieve the high level of satisfaction with limited resources then this position is not considered as a proper assumption of profit maximization. The main objective of a business is to maximize profits (unlike non-profit organizations). This objective cannot be achieved with the above mentioned argument. Apple would not be used by the majority of the customers in the industry market share if assumption is followed. Neither would the company reap any profits (unlike the present situation which is in millions).
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