Final answer:
The concept referred to is a 'standard,' which quantifies the amount and cost of inputs needed to produce a single unit of output, using standard units of measurement to calculate production costs and set prices.
Step-by-step explanation:
The quantity and price of an input required to create a single unit of output is identified by a standard. This involves estimation to determine how many inputs are needed to produce a certain output and at what cost. Understanding the standard units of measurement is crucial, as these units, which include weight (or mass), length, and liquid volume, are integral in calculating the cost of production. For instance, in the customary and metric systems of measurement, weight may be measured in pounds or ounces while volume might be measured in gallons or liters. The production function of a firm outlines how inputs are transformed into outputs, guiding the calculations for the optimal input usage based on the cost of production and the desired profit margin.