ECONOMICS MICRO ECONOMIC THEORY III
Harvard University
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THEORY OF THE FIRM I : MICRO-ECONOMICS THEORY III
- Class notes • 13 pages • 2021
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A firm is a decision making unit/entity which through process of production converts inputs into 
outputs. The producer is assumed to be motivated by the objective of maximizing profits where: 
 Profit= Gross revenue-Expenditure 
 TR TC 
 TR PQ 
Where P is the output price and Q is the output 
Other objectives of the firm include: 
 Revenue maximization 
 Cost minimization 
 Market share maximization 
It is assumed that the objective of a firm is to maximize profits but s...
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