A firm is a unit of production. It is the process by which factors of production are transformed into goods and services.
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What is the difference between a firm and an industry?
A firm is a production unit, whereas an industry is all the firms producing the same kind of output.
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Best measure of the size of a firm?
Sales revenue as a percentage of the market
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Types of firm (1)
1) Private sector:those not owned by the government. They may be owned by shareholders, as with a PLC such as M&S. Or they may be family owned, where the shares are not traded in the stock market e.g. LEGO.
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Types of firm (2)
2) Public sector: the government may own certain businesses, either because they couldn't survive without significant state funding or because the government wishes to determine the direction the business takes
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Types of firm (3)
Not for profit: consists of charities which exist to provide services to local, national and international communities, and do not see profit as a primary goal.
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Other cards in this set
Card 2
Front
What is the difference between a firm and an industry?
Back
A firm is a production unit, whereas an industry is all the firms producing the same kind of output.
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