ECON 1115 Study Guide - Midterm Guide: Oil Refinery, Sumantra Ghoshal, Management

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Actions managers take to attain the firm"s goals. For most firms, the preeminent goal is to maximize the value of the firm for its owners, its shareholders as long as it"s legal. The percentage increase in net profits over time. The higher profitability and a higher rate of profit growth will increase the value of an enterprise and thus the returns garnered by its owners, the shareholders. The amount of value a firm creates is measured by the difference between its cost of production and the value that consumers perceive in its products. The more value consumers place on a firm"s products, the higher the price the firm can charge for those products. The price a firm charge for a good or service is typically less than the value placed on that good or service by the customer. Consumer capture some of that value in the form of what economists call a consumer surplus.

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