ABSTRACT
This chapter explains the main concepts that have become familiar in everyday economic parlance, delve into the relationship between the economics of production and the life of firms. It shows average and marginal productivities always refer to one input at a time and it always measure what each input produces, once it is combined with the other factors employed in the production process. Having a better knowledge of how inputs evolve probably contributes much more to our understanding of growth than sophisticated attempts to optimise the way a constant set of inputs is combined. The chapter defines a firm as an organisation run by one or more agents: it employs different inputs and is devoted to the production of goods and services. With this caveat, it focuses on productive entrepreneurs and it simply alert the reader to the possibility that some government programmes might feed distorted/wasteful forms of entrepreneurship.
