Final answer:
The basic question a company should ask after deciding on production is what economic profit or loss it will realize. This inquiry ensures the firm's profitability and involves evaluating production and cost conditions, along with market structure influences.
Step-by-step explanation:
An economic profit is the difference between the revenue received from sales and the explicit costs of producing its goods and services, as well as any opportunity costs. Opportunity costs are a type of implicit cost determined by management and will vary based on different scenarios and perspectives. After a company has determined that it should produce a product and the amount of the product to produce.
It directly correlates with the company's goal of maximizing profitability. A firm must assess the expected economic profit to determine the feasibility of the production decision. This assessment takes into account various costs, revenues, market conditions, and the competitive landscape. Determining economic profit involves understanding the firm's production and cost conditions, as well as the market structure of the industry, which includes factors like market power, product similarity, and barriers to entry.