Consumers often choose not directly from the

commodities In economics, a commodity is an economic good, usually a resource, that specifically has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. Th ...

that they purchase, but from commodities they transform into goods through a household

production function In economics, a production function gives the technological relation between quantities of physical inputs and quantities of output of goods. The production function is one of the key concepts of mainstream economics, mainstream neoclassical econ ...

. It is these goods that they value. The idea was originally proposed by Gary Becker, Kelvin Lancaster, and

Richard Muth Richard Ferris Muth (May 14, 1927 – April 10, 2018) was an American economist who is considered to be one of the founders of urban economics (along with William Alonso and Edwin Mills (economist), Edwin Mills). Muth obtained his Ph.D. from the ...

in the mid-1960s. The idea was introduced simultaneously into

macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output (econ ...

in two separate papers by Jess Benhabib, Richard Rogerson, and Randall Wright (1991); and Jeremy Greenwood and Zvi Hercowitz (1991). Household production theory has been used to explain the rise in married female labor-force participation over the course of the 20th century, as the result of labor-saving appliances. More recently with the rise of the DIY or Maker movement household production has become more sophisticated. For example, consumers can now convert plastic wire into high-value products with inexpensive 3-D printers in their own homes.Emergence of Home Manufacturing in the Developed World: Return on Investment for Open-Source 3-D Printers
''Technologies'' 2017, 5(1), 7; doi:10.3390/technologies5010007

Example

A simple example of this is baking a

cake Cake is a flour confection usually made from flour, sugar, and other ingredients and is usually baked. In their oldest forms, cakes were modifications of bread, but cakes now cover a wide range of preparations that can be simple or elabor ...

. The consumer purchases flour, eggs, and sugar and then uses labor, know-how, time and other resources producing a cake. The consumer did not really want the flour, sugar, or eggs, but purchased them to produce the cake for consumption (instead of buying it, e.g., from a bakery).

Example

See also

References

Further reading