What is a firm in business?

A firm is a for-profit business, usually formed as a partnership that provides professional services, such as legal or accounting services. The theory of the firm posits that firms exist to maximize profits.

What role do firms play in the economy?

Firms play a crucial role in the economy by creating products and services that satisfy consumer demand. They contribute to economic growth, employment, innovation, and competition. Firms allocate resources efficiently, maximize productivity, and generate profits, which drive investments and advancements in technology.

What is a firm in microeconomics?

A firm may use natural, capital, or people-related resources to generate operational success. In microeconomics, the theory of the firm attempts to explain why firms exist, why they operate and produce as they do, and how they are structured.