To achieve the objective of maximum profit-maximum economic profit--a firm must make five basic decisions: What goods and services to produce and in what quantities? How to produce-the techniques of production to use? How to organize and compensate its managers and workers? How to market and price its products? What to produce itself and what to buy from other firm

The 20 million firms in the United States differs in size and in the scope of' what they do. But they all perform the same basic economic functions. Each firm is a economic institution that hires factors of production and organizes those factors to produce and sell goods and services.