What is material input to production process?
Learning Objectives
Show As we said earlier, this module is the first of several modules that explore the theory of the firm. Let’s define what is meant by the firm. A firm (or business) combines inputs of labor, capital, land, and raw or finished component materials to produce outputs. If the firm is successful, the outputs are more valuable than the inputs. This activity of production goes beyond manufacturing (i.e., making things). It includes any process or service that creates value, including transportation, distribution, wholesale and retail sales. Production involves a number of important decisions that define the behavior of firms. These decisions include, but are not limited to:
The answers to these questions depend on the production and cost conditions facing each firm, which is the subject of this module. The answers also depend on the structure of the market for the product(s) in question. Market structure is a multidimensional concept that involves how competitive an industry is. It is defined by questions such as these:
Figure 1 illustrates the range of different market structures, which we will explore in detail in later modules. Figure 1. The Spectrum of Competition. Firms face different competitive situations. At one extreme—perfect competition—many firms are all trying to sell identical products. At the other extreme—monopoly—only one firm is selling the product, and this firm faces no competition. Monopolistic competition and oligopoly fall between the extremes of perfect competition and monopoly. Monopolistic competition is a situation with many firms selling similar, but not identical, products. Oligopoly is a situation with few firms that sell identical or similar products. Factors of ProductionIn this module, we want to explore the relationship between the quantity of output a firm produces, and the cost of producing that output. The cost of the product depends on how many inputs (or factors of production) are required to produce the product and what those inputs cost. We can determine the costs by looking at the firm’s production function, which we will explore in detail in the next section. Figure 2. The production process for pizza includes inputs such as ingredients, the efforts of the pizza maker, and tools and materials for cooking and serving. (Credit: Haldean Brown/Flickr Creative Commons) Production is the process (or processes) a firm uses to transform inputs (e.g. labor, capital, raw materials) into outputs, i.e. the goods or services the firm wishes to sell. Consider pizza making. The pizzaiolo (pizza maker) takes flour, water, and yeast to make dough. Similarly, the pizzaiolo may take tomatoes, spices, and water to make pizza sauce. He or she rolls out the dough, brushes on the pizza sauce, and adds cheese and other toppings. The pizzaiolo uses a peel—the shovel-like wooden tool– to put the pizza into the oven to cook. Once baked, the pizza goes into a box (if it’s for takeout) and the customer pays for the good. What are the inputs (or factors of production) in the production process for this pizza? Economists divide factors of production into several categories:
The cost of producing pizza (or any output) depends on the amount of labor capital, raw materials, and other inputs required and the price of each input to the entrepreneur. Try ItGlossaryfactors of production (or inputs):resources that firms use to produce their products, for example, labor and capitalfirm:an organization that combines inputs of labor, capital, land, and raw or finished component materials to produce outputs.production:the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs Contribute!Did you have an idea for improving this content? We’d love your input. Improve this pageLearn More What is a material input?An input material has certain capabilities with respect to the ability to manipulate it to form a product element that has the desired shape, dimensions, material properties, material features, and types and number of defects.
What are the inputs to the production process?Factors of production are inputs used to produce an output, or goods and services. They are resources a company requires to attempt to generate a profit by producing goods and services. Factors of production are divided into four categories: land, labor, capital and entrepreneurship.
What is material and input for a project?Material inputs and utilities may be classified into four broad categories: Raw materials. Raw materials (processed and / or semi – processed) may be classified into four types: (i) agricultural products, (ii) mineral products, (iii) livestock and forest products, and (iv) marine products.
What is the meaning of production input?Production Inputs means goods, including raw materials, semi finished products, and accessories serving production that is fully transformed or utilized in the production process of the QIP no later than 2 (two) years after importation.
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