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Tag Archives | Firm

Evaluating the Investment Decisions of a Firm | Economics

An entrepreneur adopts the various methods of evaluating the investment while making the decision. These methods can be classified into two major categories: (i) Traditional Investment Approaches. (ii) Modern Investment Approaches. Traditional Investment Approaches: The traditional methods of investment evaluation are based on three main assumptions: (a) The profit making is the only objective of […]

Investment Decision and Size of the Firm | Economics

Problem of decision making for investment is closely related with the size of firm, and maximisation of profit. What should be the optimum size of the firm is problem with which our present day industry is faced. A.G. Robinson while discussing optimum size of the firm has said that “It is a firm in which […]

Envelope Theorem for Constrained Optimization | Production | Economics

The Envelope theorem is explained in terms of Shepherd’s Lemma. In this case, we can apply a version of the envelope theorem.  Such theorem is appropriate for following case: Envelope theorem is a general parameterized constrained maximization problem of the form Such function is explained as h(x1, x2 a) = 0. In the case of […]

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