Bi-criteria utility functions: Analytical considerations and implications in the short-run labour market

An analytical framework to address the optimisation of bi-criteria utility functions u(S,B) defined in the sales revenue–profit space is presented. Some of the macroeconomics implications underlying these kinds of utility functions are elicited. Thus, the short-run aggregate demand for labour in a context where firms maximise a utility function u(S,B) is obtained and compared with the classic demand for labour predictions derived from a profit maximisation behaviour.