Introduction

It goes without saying that firms are for profit organizations whose main goal is to maximize the difference between the revenues they generate by selling goods and the cost they incur when acquiring their production factors. Firms’ management is accountable to a wide range of stakeholders, both private and public, including shareowners, workers, customers, and governments. Although firms and other organizations might have alternative complementary goals, for example, by adopting corporate socially responsible practices, in market-oriented economies, the onus is on the managers to ensure that firms perform satisfactorily and, ultimately, can survive in competitive and ever-changing environments. Under the assumption of perfectly competitive markets, including many sellers and buyers, homogenous products, free entry and exit, and perfect information, firms do not have market power and take prices as exogenously given. Consequently, when aiming at profit maximization, their only decision variables are quantities, deciding on the amount of outputs to supply and inputs to demand.