Firms and Their Production Decisions cont. Today we take firms for granted. It is hard for us to imagine the production of automobiles without large companies (GIVE EXAMPLES IN REAL LIFE); like Ford and Toyota, the production of oil and natural gas without companies like Exxon-Mobil and Shell, or even the production of breakfast cereal without companies like Kellogg and General Mills. - But stop for a minute and ask yourself whether we really need firms to produce the goods and services that we consume regularly. This was the question raised by Ronald Coase in a famous 1937 article: If markets work so well in allocating resources, why do we need firms? answer this.

-Do we really need firms to produce cars? Why couldn't cars be produced by a collection of individuals who worked independently and contracted with each other when appropriate, rather than being employed by General Motors? answer this.

Couldn't some people design a car (for a fee), other people buy steel, rent the equipment needed to stamp the steel into the shapes called for in the design, and then do the stamping (also for negotiated fees), other people make steering wheels and radiators, still other people assemble the various parts, and so on, where again, every task would be performed for a negotiated fee? answer this.

Inputs have broad categories of labor, materials, and capital:

1. Labor inputs; give a scenario or examples.
2. Materials ; give a scenario or examples.
3. Capital; give a scenario or examples.

reference material-https://docs.google.com/presentation/d/1qVP4iKiRnavMnBFMZ4B3uNfHjmT0Bxls/edit?usp=sharing&ouid=118109221535289676461&rtpof=true&sd=true