At the end of the lesson students should be able to :
a) define production,
b) types of production,
c) importance of production, and;
d) factors of production.
Production is defined as the various economic activities aimed at the creation of goods and services and the distribution of these to the final consumers for the satisfaction of human wants. It can also be seen as creation of utility capable of satisfying certain wants.
Production types is grouped into two major categories. These are direct and indirect production.
A) direct production: it is a type of production in which an individual produces goods and services only for family use or consumption. The goods and services produced are not for sale,but for family used.
B) Indirect production: this is a type of production in which goods and services are produced in large scale, mainly for sales or exchange for other needs. This type of production makes use of modern equipment and skilled labour to be able to produce surplus goods and services. Indirect production is further divided into three major groups namely: primary, secondary and tertiary production.
i) primary production: this refers to the extraction of raw materials provided by nature. It is a process of obtaining raw materials or resources in their natural form from the land, air and water. Examples of primary production includes: mining, fishing, lumbering etc.
ii) secondary production: it involves the transformation or conversion of basic raw materials or semi-finished goods into final forms that are acceptable by the consumers. The raw materials or resources obtained from the extractive sector are transformed into finished products such as processed food, houses, roads, clothes, cars etc.
iii) tertiary production: this type of production is concerned with the provision of commerical and professional services to people. The goods produced at primary and secondary production levels are distributed to the people for consumption. The people involved here are those in commerical services like wholesalers, retailers, transporters etc. And also those involved in rendering professional services like solders, police, doctors, lawyers, musicians, teachers etc.
The following reasons makes production important:
There are four factors of production namely:
