Question

How do firms decide which goods and services to produce, and how are the costs for production assessed?

Answer 1

The Company decision about the production of goods and services Determined on reasons such as:

Factors of production: This implies that distinct Factors of production perform with the utmost value in producing that output of goods that they can create.
Access to resources also influences the decision of production.
The requirement for the good in the industry also influences your decision.
The variable and fixed factor of production also sway.
Amount of gain they can attain.
Cost of this production analyzed as follows:
Production of good incurred two sorts of cost i.e
Immediate cost is that traceable in line with this production of goods and services includes the cost of materials and labor.
The indirect cost can't be tracked such as the overhead cost of conducting production.
Indirect costs comprised overhead such as rent and wages whereas Immediate costs such as raw material and labor.