Production
Production involves the creation of products. For example, a consumer electronic company may manufacture mobile phones, pharmaceutical companies manufacture drugs, and a clothing manufacturer may produce t-shirts.
Assumptions
To simplify the analysis of a firm's production behavior, certain assumptions are made. These assumptions allow economists to create models that can predict and explain firm behavior. While they may not always reflect reality perfectly, they provide a useful framework for understanding key economic concepts. A few common assumptions are:
From Chapter 6:
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