is an entity that employs resources, or
factors of production, to produce goods and services to be
sold to consumers, other firms, or the government.

the process in which individuals perform tasks, such
as producing certain quantities of goods, based on changes in market forces
such as supply, demand, and price

• Managerial coordination

• Market coordination

the process in which managers direct employees
to perform certain tasks.

• Market coordination

• Managerial coordination

occurs when workers put forth less than the agreed-to
effort.

plays an important role in the firm.
The monitor reduces the amount of shirking by firing shirkers
and rewarding productive members.

• residual claimant

• monitor

• operator

is a person who shares in the profits
of a business firm.

• monitor

• residual claimant

• operator

cost incurred when an actual (Monetary)
payment is made, such as payment for resources bought and
rented

• Explicit Cost

• Implicit Cost

cost that represents the value of resources
used in production for which no actual (monetary) payment
is made, such as opportunity costs

• Implicit Cost

• Explicit Cost

the difference
between total revenue and explicit costs

• Economic Profit

• Accounting Profit

the difference between
total revenue and total cost (both explicit
and implicit)

• Economic Profit
  

• Accounting Profit