...CHAPTER 7
THEORY OF FIRMS AND MARKET STRUCTURE I : PERFECT COMPETITION AND MONOPOLY
PREPARED BY : SITI NORDIYANA ISAHAK
THEORY OF FIRM
• FIRM – an organization/ institution that combines all resources for the production of goods and services. • INDUSTRY – a group of firm that produces or sells similar product in the same market. E.g : manufacturing industry such as textile, soaps, foods, servicing industry and so on. • Firm’s objective – maximize profit – attain production efficiency whereby cost is minimized TOTAL PROFIT = TR – TC if TR >TC → Profit (+ve) if TR
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