6.4. The firm problem
Let us turn now the attention to the second basic institution of the economic system, which is the firm.
The firm faces the economic problem of deciding how much to produce and how much of the various inputs to use within the production process, considering the costs the firm must sustain, the prices and demand of the output and considering the important technological relations between output and inputs.
Similarly to what we have seen with the consumer problem, the firm problem is that of finding the optimal combination of inputs that maximizes the total output production with a given total cost constraint (or minimizing the total costs for a given output production, which is the mathematical dual problem).
In general, ...
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