Economics 1021A/B Lecture 9: Chapter 10 Organizing Production

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Nicholas Kanhert

Document Summary

An institution that hires factors of production and organizes them to produce and sell goods and services. How to produce (and at what price) If the firm fails to maximize its profit, the firm is either eliminated or taken over by another firm that seeks to maximize profit. Accountants measure a firm"s profit to ensure that the firm pays the correct amount of tax and to show it investors how their funds are being used: profit = total revenue total cost. Accountants use revenue canada rules based on standards established by the accounting profession. Economic accounting: economists measure a firm"s profit to enable them to predict the firm"s decisions, assume that the goal of these decisions is to maximize economic profit. Total revenue minus total opportunity cost of production. The value of the best alternative use of the resources that a firm uses in production.