The study of the profit-maximizing firm in a single time period is the essential starting point for the analysis of the economics of corporate decision making. Furthermore, with the attention given to earnings by market participants, the insights gained by this study should be practically relevant. Among the questions this reading will address are the following:
How should profit be defined from the perspective of suppliers of capital to the firm?
What is meant by factors of production?
How are total, average, and marginal costs distinguished, and how is each related to the firm’s profit?
What roles do marginal quantities (selling prices and costs) play in optimization?
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