ABSTRACT
Consideration of the physical aspects of production discussed in the previous chapter is crucial in decision making in the firm. However, in that chapter we did not incorporate either the costs of the resource inputs or the revenue from the output. For optimal decision making, all of these aspects need to be incorporated into the analysis as well. Both the output program and the set of resource inputs that maximize total profit are the assumed objectives, and in a free market system the firm must give these objectives high priority.
