Economics for Management (CQD7001)Topic 2The Firm and Its Goals (Solution)Question 1.The following is a quote from aNew York Timesarticle:“If a company makes productdonations to the school-computers for instance-then the image of a company goes up asgraduate students use the company’s products.” Does such action square with a company’sobjective of profit maximization? Discuss.SolutionYes. The company can profit from this action in several ways. Graduate students, impressedwith the computers, may become recruits for the computer firm. This increases the employ-ment market for the firm, and it may become able to hire some superior graduates. Or, thesestudents, after graduation, will work for other firms and recommend the computer madeby this manufacturer for use in their work place.In short, if the additional profits fromfuture sales exceed the cost of the donation, then such a policy is quite consistent with profitmaximization.