Final answer:
The main difference in markups between supermarkets and restaurants is attributed to overhead costs, with restaurants typically facing higher expenses for labor and operational costs related to food services, thereby requiring higher markups to achieve profits.
Step-by-step explanation:
The difference between the markups added by supermarkets and those added by restaurants relates mainly to overhead costs. Supermarkets generally have lower overhead costs compared to restaurants, which must account for significant labor costs for their staff, higher utilities expenses related to food services, and other operational costs associated with running a dine-in establishment. On the other hand, supermarkets often operate with more economies of scale, which can mitigate some of the overhead costs. Both supermarkets and restaurants mark up their products to cover their costs and achieve a desired level of profit; however, the nature and proportions of these costs can vary greatly between the two types of businesses. The cost of producing an item like pizza includes labor, raw materials, and other inputs. The final price set by a firm includes both the production costs and the desired profit margin, which in turn influence the markup that is seen by consumers.