Profit Maximization and the Firm Topic Index

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Labor Cost Per Unit of Output

All else equal a rise in unit labor cost will reduce profitability, while a fall in unit labor cost will increase profitability.

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Stock Prices: S&P 500

Shareholders in a capitalist economic system seek maximum profit. Yet large companies with publicly traded stock, such as those represented in the S&P 500, feature a separation of corporate ownership (stockholders) and control (management). Increasingly many large corporations pay a large portion of executive salaries in stocks or stock options in order to align the incentives of managers with those of shareholders.

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