7.1 What Are Firms? LO 1
Production is organized either by private-sector firms, which take
four main forms—single proprietorships, ordinary partnerships,
limited partnerships, and corporations—or by state-owned enterprises
and non-profit organizations.
Modern firms finance themselves by selling shares, using their
retained earnings, or borrowing from lenders, such as banks.
A firm’s profit is the difference between its total revenue and its total
costs.
Economists usually assume that firms attempt to maximize profits.