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ECON 208 CH7 Producers In The Short Run.pdf

4 Pages

Economics (Arts)
Course Code
ECON 208
Michel Lapointe

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ECON 208 Introduction To Microeconomics Introduction To Microeconomics Chapter 7 Producers In The Short Run Firms can be organized in 6 ways 1 Single proprietorshipOne ownermanager 2 Ordinary partnershipJoin owners 3 Limited partnershipGeneral partners run the business and take responsibilityLimited partners invest in the firm 4 CorporationIdentity of its ownOwners are not responsibleDirectors are responsible 5 State owned enterpriseGovernment ownedState appointed board 6 Non profit organizationsProfits are not claimed by individualsFirms with locations in more than one country are called Multi National Enterprises or Trans National CorporationsEquity is the funds provided by the owners of the firmDebt is the funds borrowed from creditors outside the firmDividends are profits paid out to shareholders of a corporationBond is a debt instrument carrying a specific amount of interest payments and usually a date for redemption of its face valueTwo key assumptions 1 Firms are profit maximizers 2 Each firm is a single consistent decisionmaking unitFour types of production inputs 1 Intermediate products products from other firms 2 Inputs provided directly by nature such as land 3 Inputs provide directly by people such as labour 4 Inputs provided by the services of physical capital such as machinesProduction function is a functional relation showing the maximum output that can be produced by each and every combination of inputsQfLKQoutput
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