ECON 230D1 Chapter 6: Chapter 6
14 Dec 2017
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These rms operate under a partnership agreement: cooperations are owned by shareholders in proportion to the number of shares or amount of stock they hold. The shareholders elect a board of directors to represent them. Chapter 6: e cient production or technological e ciency is a situation in which the current level of output cannot be produced with fewer inputs, given existing knowledge about technological and organization of production. If a rm does not produce e ciently, it cannot be pro t maximizing. Therefore e cient production is a necessary but insu cient condition for pro t maximization: even if a rm is conducting e cient production, that does not mean it is maximizing its own pro ts. If the rm is either producing too much output or producing too little output at a given price level or is using excessively expensive inputs, then pro ts are not maximized.
