What is the primary objective of a firm according to economic principles?

The primary objective of a firm in economic terms is focused on maximizing profits while considering the need to manage expenses effectively. This perspective stems from traditional economic theory, which posits that firms operate to enhance their profit margins by increasing revenues and managing operational costs.

Maximizing profits means striving to generate the highest possible financial return from operations, which often involves strategic pricing, efficient production, and effective marketing. While minimizing expenses is certainly a critical part of achieving that goal, it is the ultimate aim of profit maximization that defines the firm’s fundamental purpose.

Other choices may reflect certain aspects of business strategy, such as the importance of managing costs or market presence, but they do not encompass the primary objective as clearly as the focus on profit maximization does. For instance, simply increasing market share or expanding product lines does not guarantee profitability, which is essential for a firm's long-term sustainability.