Based on the video and answer the following questions.

1. How many new concepts of profit maximization were mentioned and how will you describe each?

2.What is the best profit maximization structure? Why?

3. What were some of the new information that you learn from this video?

4. What are your observation on how big businesses in the Philippines are conducted?

 

1) Every firm or business operates with the sole motive of profit maximization. The video describes that firms who operates in competitive market cannot influence the level of price in the market. This is because all sellers produces identical products and and charging a higher price would mean zero sales.

The only way of maximizing profit for firms in competition is by deciding on the quantity to produce which will enable the firm to sell more and earn more.

2) To maximize the profit, the firm should increase the employment of input up to the point where the input's marginal revenue product equal its marginal cost. This is best profit maximization structure where a firm should increase its output keeping in mind the marginal costs. This is because if firms keep on producing more and more output without evaluating costs, the revenue will fall reducing the profits.

3) This video enables us to understand the structure of firms competing in the market. These firms are price takers and only have the power to decide the quantity they want to produce. This is because these firms produce a very tiny share of total market output. The example of production of oil from well explained the concept well where the total market production of oil is 82,000 barrels while a single firm can choose to produce a quantity of 5, 10 or 20 barrels which is negligible. Thus, it concludes that firm can only maximize profit by deciding on the quantity to produce.

4) The Philippines business culture has a lot of influence of foreign culture as well as traditional aspects of local culture. Just like businesses elsewhere in other countries, the big businesses of Philippines are also driven by profit motive. In Philippines, personal relationships are important for building business relations.