The Theory of Costs
The aim of this and the following chapter is to look specifically at the behaviour of firms. The analysis outlined in this chapter is concerned mainly with identifying the relationship between a firm’s inputs and outputs, together with the approach used by economists to analyse the costs a firm incurs and the revenue it receives from engaging in a productive activity. Drawing on this material, Chapter 6 focuses on the importance of market structure as a determinant of producer behaviour, with direct reference to the construction industry.
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