Which of the following is/are the characteristic(s) of a firm? [I]: It represents the unit that employs factors of production to produce goods and services. [II]: The firm could take different forms. [III]: The firm largely determines how goods and services are produced.

Question

[I] and [II] only


[I] and [III] only


[II] and [III] only


[I], [II] and [III]


None of the above

Answer 1

The correct answer is: [I], [II] and [III].

All three statements describe characteristics of a firm:

• [I] is true because a firm indeed represents a unit that employs factors of production to produce goods and services.
• [II] is true as firms can take different forms (e.g., sole proprietorships, partnerships, corporations).
• [III] is also true because firms largely determine how goods and services are produced, which includes decisions about production techniques, labor, and other factors.

Thus, all statements are characteristic of a firm.