Describe private firm as producer and employer?

a. describe the principal of profit maximization as a goal


b. describe what determines the demand for factors of production


c. define total and average revenue


d. analyze particular situations to show the effects of substituting one factor for another and to show the changes in total and average cost as output changes


e. describe the main reasons for different sizes of firms (size of market; capital; organization)


f. define integration, economies and diseconomies of scale

Describe private firm as producer and employer?
A. All businesses wand to maximize profits while maintaining a competitive price. With the right price and the right profit margin, an item will sell 1,000 units at a margin of 40% and return $400 in pure profits. If the price is too high, then that 1,000 units will turn out to be 250 units, thus lower profits. Too low a price will do the opposite.





B. Demand for domestic production and demand for export production. Retail and cost of the item and the number of outlets for those products.





C. Total is the sum. Average is the average revenue per item.





D. Can't do that in this fashion.





E. Small firms fill specialty niches. Medium firms cater to a specific geographic or demographic area. Large firms cater to all. Efficiencies of scale drive businesses to become larger and more organized.





F. Vertical integration is the development and manufacturing + selling of a product from design to shelf and all other support systems including raw materials.


Economies of scale allow a firm to consolidate and reduce costs and increase scale.


Diseconomies of scale allow for a firm to be agile enough to capitalize on opportunities and make extra profit.
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