Through production the firm generates supply which is the obverse of consumer demand. In theory, production is viewed as the only function of the firm. Through supplying commodities demanded by consumers, the firm maximizes profits. This last factor is poorly defined and resists empirical measurement. In theory, quantity of output, along with price and cost is key in the economic equation.
Output is increased until any additional output reduces profits.
In theory, it is assumed there is no significant effect of their separation and profit maximization remains the functional objective of the firm. In theory, geographic diversification is not formally considered except as additions to factor cost. Similarly multiple outputs not formally considered. Cost the value of factors of production in producing output and serves, along with price and quantity of output, as key factor in economic decision-making. Profit Maximization the rational entrepreneur tries to maximize profits.