1_What is the Firm
.pdf
INTERNATIONAL BUSINESS SCHOOL
Plekhanov Russian University of
Economics
Economics of the Firm
Fall Term: Part I
Introduction:What is the Firm?
Prepared by
Anna A. Dokukina
Learning objectives
After studying this section, students should be able to describe:
The meaning of the firm
The market system and entrepreneurship
Theoretical concepts of the firm: economic theories
The firm and the business environment
Business objectives
What is the Firm?
The firm: definition
Firm is social arrangement for the controlled performance and collective goals
Firm is an economic organization that coordinates the process of production and
distribution
What is the Firm?
Terminological variety
Firm – legally registered organization designed to provide goods and services.
Business – activity of making, buying, and selling or supplying goods or services for money.
Business organization – an arrangement which pursues collective goals, controls its own performance; essentially refers to managerial issues.
Enterprise – an industrial production; large project (=venture).
Company – business unit that carries on industrial enterprises.
What is the Firm?
Economics of the firm as a field of study
Market system: the meaning of the terms “market” and “market system”
How do you understand the meaning of the term “market”?
What is the Firm?
Market system: the meaning of the terms “market” and “market system”
Market (in its general sense) -
place where buyers and sellers come together
What is the Firm?
The various types of markets: 
examples
Job market
Food market
Financial market
Human resources market
Chemicals market
Security market, etc.
What is the Firm?
The difference between goods and services
Product
is the output of a firm that is offered for use or consumption by the buyer
Goods – |
Services – |
“visible products” |
“invisible products” |
•Foods |
•Insurance services |
•Cars |
•Health provision |
•Chemicals |
•Legal advice |
What is the Firm?
For each the organizations listed 
below, state:
The main product offered to the market
Whether the product is “good” or “service”
The buyer of the firm’s product
1.
2.
3.
4.
Chain of Supermarkets
Ingosstrakh Insurance Company (Russia)
University of Cambridge (GB)
Nokia Consumer Electronics (Finland)
5.The Regular Army
What is the Firm?