8-1Costs1 - Costs Chapter 12-1 (my version of it) Laugher...

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Costs Chapter 12-1 (my version of it)
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Laugher Curve A woman hears from her doctor that she has only half a year to live. The doctor advises her to marry an economist and to move to South Dakota.
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Laugher Curve “Will this cure my illness?” she asked. No, but the half year will seem pretty long.”
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Introduction In the supply process, people first offer their factors of production to the market. Then the factors are transformed by firms into goods that consumers want. Production is the name given to that transformation of factors into goods.
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The Role of the Firm The firm is an economic institution that transforms factors of production into consumer goods – it: Organizes factors of production. Produces goods and services. Sells produced goods and services.
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The Firm and the Market Firms are the production organizations that translate factors of production into consumer goods.
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The Role of the Firm Firms transform the factors into goods for consumers Production is the transformation of factors into goods In the supply process, people offer their factors of production, such as land, labor, and capital, to the market Ultimately, all supply comes from individuals because control the factors of production 12-7
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The Role of the Firm 1. Organize factors of production and/or 2. Produce goods and services and/or 3. Sell produced goods and services A virtual firm organizes production and subcontracts out all work A firm is an economic institution that transforms factors of production into goods and services Many of the organizational structures of business are being separated from the production process Firms 12-8
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Virtual firms subcontract out all work. More and more of the organizational structure of business is being separated from the business. The Role of the Firm
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8-1Costs1 - Costs Chapter 12-1 (my version of it) Laugher...

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