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The Fatal Equilibrium

Term Paper Title: The Fatal Equilibrium
Word Count: 863
Page Count: 3.45 (250 words per page double spaced)

The Fatal Equilibrium

Principle of Economics 2304

When faced with competition, firms must seek profit maximization in order to grow and survive against the threat of new competitors. As explained by the natural selection theory presented by some economists, firms that do not seek to maximize profits may be forced to close their doors when competitors offer higher-quality products to consumers (Ruffin & Gregory 135). Further, in Adam Smith’s view of capitalism, firms must pursue their self-interest in the form of profits and these profits motivate firms to pursue society’s interest while striving for their goals (Ruffin & Gregory 135). Profit maximization or rewards motivate people to commit certain acts or behave in a particular manner in order to reap rewards. Whether that action provides higher profits, increases revenues or market share, or minimizes losses, people will act in their own self-interest and take the necessary measures that give them an advantage over their competitor.
The term profit maximization explains “the search by firms for the product quality, output, and price that give the firm the highest possible profits” (Ruffin & Gregory 135). In the case of The Fatal Equilibrium, a number of individuals act as firms that seek to maximize their profits by presenting their product (themselves) in a manner that gives them an advantage over their competitors. The firms in this story sought to limit their exposure to the ups and downs of the economy (or life) by taking actions that minimized the risks and increased their profit margins. Therefore, we shall demonstrate how three individuals, Dennis Gossen, Dorothy Nolan, and Denton Clegg sought to maximize their profits through their actions.
First, let’s present the firm of Dennis Gossen a brilliant young man with unlimited potential. Dennis was an exceptional economist with tremendous skills at collecting numbers and interpreting them through the economic theories (Jevons 5). Though part of the junior faculty, Dennis would be reviewed for a tenured teaching position at Harvard in the upcoming promotion and tenure votes. Being part of Harvard’s faculty was a prestigious and dubious honor—one he did not wish to relinquish under any circumstances (Jevons 7). Therefore, when Dennis accidentally discovered that Harvard’s Dean, Denton Clegg, had fabricated false research information for his book, Dennis used that information to maximize his profits and gain the promotion. Since Dennis’ future promotion was uncertain, he decided to minimize the risk of missing the promotion by blackmailing Dean Clegg and ensuring that his firm would beat out the competitors. It was simply a question of supply and demand. Numerous candidates vied for the limit...

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