The theory of production and cost

Theory of Production

In a microeconomic model,  it is not only a consumer who exercises a demand  – there is also a producer. The producers supply goods and services to the consumers. The first economic assumption is maximum profit. The motive of the producer is to make a profit! This motive is valid for the farmer, the shoe-producer, the pharmacists, the hairdresser and any other producer of goods and services.

Watch the following three episodes of flipping economics to better understand the theory of production.