A firm is considered to consist of a group of homogeneous individuals and it is entrepreneur less. The firm is assumed to be an entity that behaves rationally in the interest of the firm, and the interest of the firm is no other than satisfying the goal of the firm; profit and maximization of profit. Conceptually, since the firm consists of homogeneous individuals, then every individual in the firm should have the same goal of the firm, that is, the maximization of profit for the firm.Profit can initially be defined as revenue minus cost. If profit is to be maximized, it is logical to assume that the firm must do what it can to maximize revenue on one hand, and minimize cost on the other. Hence model builders started to build models to satisfy this assumption, despite one missing ingredient; people, the entrepreneur in the first place and in addition to the entrepreneur, the host of others who might be working in the firm.
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