Theme 1> Theme 1.1> Theme 1.1.2>Rational Decision-Making by Producers
Rational Decision-Making : Producers
IntroductionIn the previous section, we explored the overview of the process of rational decision-making from the perspective of a consumer.
In this learning package, we will see how this framework can be applied to the decisions of another economic agent, the producer. ActivityThis video illustrates the considerations of producers making decisions.
In summary
CheckpointQuestion 1
A producer or firm is an organisation that transforms resources (inputs) into products (outputs) that are sold in the market. Firms are the primary producing units in a market economy.
Question 2
The decisions of a firm are affected by other economic agents such as:
Question 3
Due to the complexity of decisions made by firms, all the components of the decision-making framework (ie. Constraints, benefits, costs, information, perspectives, must be used.
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