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Definition of 'Firm'

A firm is an economic entity that hires factors of production (labour and capital) in the market and uses them to produce goods and services for sale in return for profit. Firms can be classified into different types based on their ownership structure, legal form, and size.

**Ownership structure**

Firms can be either privately owned or publicly owned. Privately owned firms are owned by a single individual or a group of individuals. Publicly owned firms are owned by the general public through shares that are traded on the stock market.

**Legal form**

Firms can be organized as sole proprietorships, partnerships, corporations, or limited liability companies (LLCs). Sole proprietorships are owned by a single individual. Partnerships are owned by two or more individuals. Corporations are owned by shareholders. LLCs are owned by members.


Firms can be small, medium, or large. Small firms have fewer than 50 employees. Medium firms have between 50 and 250 employees. Large firms have more than 250 employees.

**Firms play an important role in the economy by creating jobs, producing goods and services, and generating economic growth.**

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