Overview
Firms produce goods and services that are then consumed by the consumers in an economy. However, production is not free. Firms face constraints on the amount of any good or service that it can produce, primarily in the form of production costs. As such, the firm faces decisions about how much to produce in order to maximize its profits.
Topics
- Production Function - is a function that describes the amount of product that can be produced given a specified amount of inputs.
- Costs are the expenses that a firm bears in order to pay for the inputs to its production process.