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Abstract

This publication is intended to provide simplified and well-organized academic material for the course “Economics of the Firm,” primarily aimed at first-year students, in accordance with the nature of their academic training and their need to develop a clear foundational understanding of the firm and its role in economic activity. It aims to help students understand the fundamental concepts and principles related to the firm, its nature, characteristics, and development, as well as the various factors that influence its activities and decision-making. This publication addresses the main topics covered in the course Economics of the Firm, beginning with the concept, emergence, and development of the firm, followed by its relationship with its internal and external environment, its classification according to various criteria, and an examination of its organizational structures, functions, and resources. It also presents the basic principles of the economic analysis of the firm, including costs and revenues, the break-even point, financial analysis, and performance analysis, in addition to several tools that contribute to understanding the firm’s economic and strategic position. The publication also examines the life cycle of the firm and its patterns of growth, including the stages of establishment, growth, maturity, and decline. It further highlights the importance of organizational culture, business ethics, and social and environmental responsibility in ensuring the firm’s sustainability and strengthening its relationships with the various stakeholders with whom it interacts. In light of the rapid economic and technological transformations taking place today, the publication also addresses the main contemporary trends in the economics of the firm, particularly digitalization and digital transformation, innovation, start-ups, globalization, sustainable development, and artificial intelligence. These factors increasingly influence management practices and the firm’s ability to compete and adapt to its environment. In preparing this publication, particular attention has been given to clarity, progression, and organization, in order to help first-year students understand the content of the course and grasp its fundamental concepts. It aims to provide students with an integrated view of the firm in terms of its nature, organization, functions, resources, environment, performance, and development, thereby establishing a solid foundation upon which they can build throughout their university studies.