The Theory of the Firm

The Theory of the Firm explores how businesses make decisions to maximize profits. It examines how firms choose what to produce, how much to produce, and at what cost, considering factors like competition, pricing, and resources. The theory looks at the relationships between firms, their employees, and consumers, focusing on profit maximization as the main goal. Different market structures, such as monopolies or perfect competition, influence a firm’s behavior and strategies. Ultimately, it seeks to understand the inner workings of businesses and their roles in the economy.