Giovanni, I think that your vision was good, but economically, it could use work. I believe that you had the right intentions on running you business, however I see where your problems come about. As your consultant, my job is to not only tell you where your mistake occurred, but also help you fix it. Obviously, Giovanni 's Pizzeria has a lot of potential and I want to help you achieve that success. While demand for your pizzas are high, you need to consider the business and economic decisions you are making. You had the right idea of hiring new workers to keep the demand high, but hiring new employees also means changing other things in your business as well. As you can see from the chart, the data shows that while you are hiring more employees,
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The data shows that you are almost 300 pizzas behind in production and I am going to help you change that. Your main problem is clearly the addition of new workers. While you would not see that as being a problem, more workers means more pizzas, there is more to it. There is something called factors of production that you need to consider when making changes to your business. Factors of production is anything used to produce a product and service. There are four of these factors, when you change one, you usually need to change them all. So far, you have only changed one of the four, labor. This is the human factor of production, your employees. The reason that the amount of pizzas is not increasing the way you would like it to, is because we now need to change the other four factors. The next factor is entrepreneurship, this is the knowledge and skills to produce the product, which clearly, with one employee making 65 pizzas a day, you have the required skills. Next, is the land, what you need to produce …show more content…
First, there is total production, the total output a production unit can produce, using different combination of the four factors of production. There is a term, marginal product, that is the output you get when adding a worker. Right now, your marginal product should be a lot higher than it is because you have eleven people making pizzas for you, but because you are in the short run and some factors stayed constant, the output is not as high as it should be. Diminishings marginal product is what is happening to you right now. This is when you continue to input units, workers, while you keep other units (four factors) constant, and the output (amount of pizzas) decreases. To fix your problem and meet the high demand, you have two options. You could always fire the workers that you hired and leave it to about two or three, and you would not have to change the capital, or land. If you would like to keep all of the workers, you could always open a second pizzeria. This would allow you to keep the workers, create another amazing pizzeria, and create and meet new demands. If you were to expand the company, you would need to consider the explicit costs that are involved. This includes, buying supplies, new equipment, rent, and wage. After choosing a decisions, and changing all of the factors, you can be apart of the long run. This means that as all factors of production began to change, the
The data shows that you are almost 300 pizzas behind in production and I am going to help you change that. Your main problem is clearly the addition of new workers. While you would not see that as being a problem, more workers means more pizzas, there is more to it. There is something called factors of production that you need to consider when making changes to your business. Factors of production is anything used to produce a product and service. There are four of these factors, when you change one, you usually need to change them all. So far, you have only changed one of the four, labor. This is the human factor of production, your employees. The reason that the amount of pizzas is not increasing the way you would like it to, is because we now need to change the other four factors. The next factor is entrepreneurship, this is the knowledge and skills to produce the product, which clearly, with one employee making 65 pizzas a day, you have the required skills. Next, is the land, what you need to produce …show more content…
First, there is total production, the total output a production unit can produce, using different combination of the four factors of production. There is a term, marginal product, that is the output you get when adding a worker. Right now, your marginal product should be a lot higher than it is because you have eleven people making pizzas for you, but because you are in the short run and some factors stayed constant, the output is not as high as it should be. Diminishings marginal product is what is happening to you right now. This is when you continue to input units, workers, while you keep other units (four factors) constant, and the output (amount of pizzas) decreases. To fix your problem and meet the high demand, you have two options. You could always fire the workers that you hired and leave it to about two or three, and you would not have to change the capital, or land. If you would like to keep all of the workers, you could always open a second pizzeria. This would allow you to keep the workers, create another amazing pizzeria, and create and meet new demands. If you were to expand the company, you would need to consider the explicit costs that are involved. This includes, buying supplies, new equipment, rent, and wage. After choosing a decisions, and changing all of the factors, you can be apart of the long run. This means that as all factors of production began to change, the