> Output is by definition value-added. The ham and bread is not part of the
> value-added by the factors of production employed by the student sandwich
> makers. Nor is the ham and bread used to manufacture the value-added. So
> they are not factors of production. Another check: factors of production
> receive an income. The ham and the bread do not receive an income.
> Michael Parkin
Michael,
I am not sure that I understand your "another check:..." Is it the
factor that receives income or the owner of the factor? Surely the
deli owner, owner of the bread and ham, receives an income sufficient
to maintain the inventory or inventories will decline or the deli
will cease to exist.
And whether output is value added or the output is the product as it
leaves the firm's ownership, makes little difference--more or less,
as one is identical to the other, except for a "constant" added to
both sides of the production function. Just alternate ways of
viewing the same phenomena. It just depends on how we think of
output--but is does mean we must be consistent.
Morris Coats