The pizzaiolo was the primary example of labor here. Labor – When we talk about production, labor means human effort, both physical and mental.If, instead of pizza, we were looking at an agricultural product, like wheat, we would include the land the farmer used for crops here. If the establishment heats the oven with natural gas, we would count this as a raw material. If the pizza place uses a wood-burning oven, we would include the wood as a raw material. ![]() These include the flour, yeast, and water for the dough, the tomatoes, herbs, and water for the sauce, the cheese, and the toppings. Natural Resources (Land and Raw Materials) – The ingredients for the pizza are raw materials.What are the inputs (or factors of production) in the production process for this pizza?Įconomists divide factors of production into several categories: Once baked, the pizza goes into a box (if it’s for takeout) and the customer pays for the good. The pizzaiolo uses a peel-the shovel-like wooden tool– to put the pizza into the oven to cook. The cook rolls out the dough, brushes on the pizza sauce, and adds cheese and other toppings. ![]() Similarly, the pizzaiolo may take tomatoes, spices, and water to make pizza sauce. The pizzaiolo (pizza maker) takes flour, water, and yeast to make dough. the goods or services the firm wishes to sell. labor, capital, raw materials) into outputs, i.e. Production is the process (or processes) a firm uses to transform inputs (e.g. (Credit: Mushroom and arugula pizza by Haldean Brown / Flickr CC BY-SA) Figure 6.3 Pizza Production The production process for pizza includes inputs such as ingredients, the efforts of the pizza maker, and tools and materials for cooking and serving. ![]() We can answer the former question by looking at the firm’s production function. We mentioned that the cost of the product depends on how many inputs are required to produce the product and what those inputs cost. In this chapter, we want to explore the relationship between the quantity of output a firm produces, and the cost of producing that output. Explain the concept of diminishing marginal productivity.Differentiate between production in the short run and in the long run.Distinguish between the different types of inputs or factors in a production function.Explain the concept of a production function.By the end of this section, you will be able to:
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