Economic Objectives of Indiviuduals, Firms and Government

There is a divorce of ownership is the difference between people who own the firm who are the shareholders, and the people who control the firm the managers. The shareholders are investors into the firm and want the firm to make a profit so they receive dividends which is a share of the profit, they want to maximise their dividends/profits. Managers work on behalf of the shareholders and are responsible for the running of the firm and they receive a wage/salary for doing this.

There are three internal and one external governance mechanisms used for owners to govern managers to ensure they comply with their responsibility to satisfy stakeholders and shareholder’s needs. First, ownership concentration is stated as the number of large-block shareholders and the total percentage of the shares they own (Hitt, Ireland, Hoskisson, 2017, p. 317). Second, the board of directors which are elected by the shareholders. Their primary duty is to act in the owner’s best interest and to monitor and control the businesses top-level managers (Hitt, Ireland, Hoskisson, 2017, p. 319). Third, is the

Although stock implies ownership, few equity investors expect to play a role in running the companies whose shares they buy. Such firms are widely held, and few stockholders have large enough blocks of stock to influence management decisions. In small business, of course, owners usually run their companies.

Managers and shareholders are the utmost contributors of these conflicts, hence affecting the entire structural organization of a company, its managerial system and eventually to the company's societal responsibility. A corporation is well organized with stipulated division of responsibilities among the arms of the organizational structure, shareholders, directors, managers and corporate officers. However, conflicts between managers in most firms and shareholders have brought about agency problems. Shares and their trade have seen many companies rise to big investments. Shareholders keep the companies running

CONTROL- Shareholders do not typically manage the company’s business. Instead a board of directors is elected. The board of directors has direct control over the company. A board member can also be a shareholder.

Throughout this task I will do my best to explain how firms determined to maximize profit do just that. Specifically I will delineate how such firms choose the optimum level of production or output for the goods they produce and how they behave with respect to various elevations of marginal revenue. In my attempt it will be appropriate for me to clarify the definitions of various economic terms in order to assure a proper understanding of my thoughts on this topic, I will provide these definitions throughout.

Inflation is a general increase in the prices of all goods and services. Inflation occurs when the average level of prices in the economy increases over time. Even as overall prices are increasing, particular relative prices will change. The US Federal Reserve attempts to control and reduce inflation. Central banks focus is on strictly controlling inflation, protecting financial assets, and keeping labor markets strictly in check. Central Banks hold inflation more important than unemployment. Central Banks believe the only long-run impact of monetary policy is on the rate of inflation. They believe free-market forces in the real economy determine real output, employment, and productivity. To attain the targeted inflation rate, central banks influence credit creation and hence spending by frequently adjusting interest rates.

The price of cheese and milk in the market are $2 and $5 respectively.  Assume that the cheese and milk markets are perfectly competitive. What output of milk maximizes profits?

Evaluate the view that the separation of ownership from control in large firms inevitably causes diseconomies of scale

Inflation presents a problem for the FED achieving it’s goal of price stability. Inflation is unavoidable as far as the natural progression of an economy is concerned. Supply and demand also affect inflation. While the FED cannot control supply and demand of a product, I would suggest that they try to control price stability by creating regulations of what a company can charge related to the supply and value of a product. A high unemployment rate negatively affects the FED’s goal of a high employment rate. The employment rate is

Deming believe that people want a sense of joy and pride in there work. Money is needed for living but joy and pride is valued more. They want recognition more than the dollar. Along with Dr. Deming, Herzberg believed that money is no motivator also. I know many people feel if they got paid more than they would do more at their job. There are many who feel they are over worked and not paid enough. They think if they were to receive more money, they would do a better job. Dr. Deming and Herzberg would disagree. They would say that those employees do not like there job and regardless what one would pay them, they still would not put forth their best effort because money is not a motivator.

To calculate profit maximization one may first calculate profit, which is Profit = Total Revenue – Total Costs. The following graph illustrates the organization’s steady growth in profitable business, but declining profit maximization:

Lazear poses the question in his paper ‘Personnel Economics: The Economist’s View of Human Resources’, of “Why do some jobs pay workers an hourly wage or salary and other jobs pay based on the workers’ performance?” (8). And he continues, as I will, to differentiate the two methods and the reasons why they’re used.

According to Maxell et al (2014, p 65) monetary incentives are used by employers of labours to retain their best brains and as well compensate them for a job well done and excellence of job performance through monetary form. It is during this contractual agreement that attitudes a developed by the employee towards wages. How much is being paid has a potential cause attitudes either way, positive or negative. In essence pay or incentives

Some would say that the main reason why the control of inflation is so important is that if inflation gets out of control, the economy stops growing. If inflation rises, the Monetary Policy Committee (MPC) is forced to raise interest rates. Consumers will stop borrowing to spend and firms will stop borrowing to invest. The housing market will slump, and along with it all the home improvement consumption that goes with it. Manufacturers exports will become less competitive. The economy may well