MGMT 1040 Chapter Notes -Pareto Efficiency, Economic Equilibrium, Profit Maximization
18 Mar 2014
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Economic outcomes is the first evaluative means in a moral analysis. Economic outcomes do not refer just to the net balance of revenues over costs for the company. Economic outcomes in economic theory refer to the net balance of benefits over harms for the full society as a result of a certain decision or action. Most non-economists, and some economists appear to focus entirely on profit maximization. Economic theory in its complete form is more a normative theory of society than a descriptive theory of the firm. Profit maximization is a part of that theory, certainly not the central focus. Economic equilibrium is the effort by business managers try to create marginal increases in revenues against marginal increases in costs, resulting in maximum profit. Concept: pareto optimality forms the moral basis of economic theory. It would be impossible to make any single person better off without making some other person worse off .
