Editing Economics (section)

=== Firms ===
{{Main|Theory of the firm|Industrial organisation|Business economics|Managerial economics}}

People frequently do not trade directly on markets. Instead, on the supply side, they may work in and produce through ''firms''. The most obvious kinds of firms are [[corporation]]s, [[partnerships]] and [[trusts]]. According to [[Ronald Coase]], people begin to organise their production in firms when the costs of doing business becomes lower than doing it on the market.<ref>{{cite journal |last=Coase |first=Ronald | author-link=Ronald Coase |year=1937 |title=The Nature of the Firm |journal=[[Economica]] |volume=4 |issue=16 |pages=386–405 |jstor=2626876 |doi=10.1111/j.1468-0335.1937.tb00002.x|title-link=The Nature of the Firm }}</ref> Firms combine labour and capital, and can achieve far greater [[economies of scale]] (when the average cost per unit declines as more units are produced) than individual market trading.

In [[perfect competition|perfectly competitive]] markets studied in the theory of supply and demand, there are many producers, none of which significantly influence price. [[Industrial organisation]] generalises from that special case to study the strategic behaviour of firms that do have significant control of price. It considers the structure of such markets and their interactions. Common market structures studied besides perfect competition include monopolistic competition, various forms of oligopoly, and monopoly.<ref>{{cite encyclopedia |last=Schmalensee |first=Richard |author-link=Richard L. Schmalensee |date=1987 |dictionary=The New Palgrave: A Dictionary of Economics |edition= |editor-first1=John |editor-last1=Eatwell |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X001118 |doi=10.1057/9780230226203.2788 |title=The New Palgrave Dictionary of Economics |pages=1–9 |isbn=978-0-333-78676-5 |chapter=Industrial organization |series=Students business book series |hdl=2027/uc1.$b37792 |publisher=Chicago |hdl-access=free |access-date=10 October 2017 |archive-date=11 October 2017 |archive-url=https://web.archive.org/web/20171011022150/http://www.dictionaryofeconomics.com/article?id=pde1987_X001118 |url-status=live }}</ref>

[[Managerial economics]] applies [[microeconomic]] analysis to specific decisions in business firms or other management units. It draws heavily from quantitative methods such as [[operations research]] and programming and from statistical methods such as [[regression analysis]] in the absence of certainty and perfect knowledge. A unifying theme is the attempt to [[Optimization (mathematics)|optimise]] business decisions, including unit-cost minimisation and profit maximisation, given the firm's objectives and constraints imposed by technology and market conditions.<ref>{{unbulleted list citebundle
|1 = {{cite encyclopedia |author=<!-- Staff Writers --> |date=5 May 2013 |title=Managerial Economics |encyclopedia=Encyclopædia Britannica Online |url=https://www.britannica.com/topic/managerial-economics |access-date=10 October 2017 |archive-date=11 October 2017 |archive-url=https://web.archive.org/web/20171011023121/https://www.britannica.com/topic/managerial-economics |url-status=live }}
|2 = {{cite encyclopedia|last=Hughes |first=Alan |date=1987 |dictionary=The New Palgrave Dictionary of Economics |location=London |publisher=Palgrave Macmillan |edition= |editor-first1=John |editor-last1=Eatwell |editor-first2=Murray |editor-last2=Milgate |editor-first3=Peter |editor-last3=Newman |chapter-url=http://www.dictionaryofeconomics.com/article?id=pde1987_X001379 |doi=10.1057/9780230226203.3017 |isbn=978-0-333-78676-5 |chapter=Managerial capitalism |pages=1–5 |access-date=10 October 2017 |archive-date=11 October 2017 |archive-url=https://web.archive.org/web/20171011072045/http://www.dictionaryofeconomics.com/article?id=pde1987_X001379 |url-status=live }} <!-- check definitions because entries say they went online in 2016 -->
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