The Microeconomics of Wellbeing and Sustainability

Chapter 4

The theory of production decisions

Abstract

In this chapter we will focus on the basic economic activity involved in the production of goods and services. After clarifying what production means in economics, we will examine the behavior of the entrepreneurs who carry out productive activity. We will then analyze the production process and see how different types of companies organize production in different ways. Finally, after considering the cost side of production we will derive the supply curve for a single company.

Keywords

What it means to produce in an economic sense; The notion of Pareto efficiency; What characterizes entrepreneurship; Types of companies; The production function; The law of diminishing returns; Returns ...