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Meaning of a firm and industry and factors that determine kind of goods and services to produce.

Answer Text:
Size and Location of a Firm.
Meaning of a firm and industry.
- A firm is a business organization under one management and one control. Examples include Bata shoe, Banks.
- An industry refers to a group of competing firms
which produce related products, e.g. Petroleum industry has different petrol stations owned by different entities.
Decision on what goods and services to produce.
- Several factors influence the decision on what goods and services to produce. These include:
- Consumer preference – A firm should produce what the consumer prefers in line with their tastes.
- Government policy – The government may encourage production of some goods in the country by giving subsidiaries.
- Availability of factors of production – This include land, labour, capital and entrepreneurship.
-Profitability of the venture – Production will be increased if the product is profitable.
-Level of competition – Business persons prefer
businesses that do not have a lot of competition.
-Available technology – Availability of technology for production of goods will determine the goods produced.
- Environmental issues – The business activities are not supposed to affect the environment negatively.- Economic factors – the general state of the economy like inflation, tax rate, population size, wages and salaries may affect a firm hence determining what to produce.