PRODUCTION.

Hey Guyz, Happy Thursday to you. How was your day yesterday, hope it was fruitful and cool. Today we are back to Econs 101 with the above topic, so let’s get straight to work.

Production is defined as the various economic activities aimed at the creation of goods and services, and the distribution of these goods and services to the final consumer, for the satisfaction of their human wants.

It is also the creation of Utility, which is the satisfaction derived from consuming a unit of a product. Production can only be complete when the goods and services get to the final consumers.

TYPES OF GOODS.

Goods can be classified into two major groups, namely:

1. CONSUMER GOODS: are goods and services that don’t need further production; they can satisfy the wants of the consumer in their form. Like Milk, Services like The Police etc.

Consumer Goods can further be grouped into the following:

a. Durable Goods- They are goods that can be used over and over again. Like Radio, Television, Cooking Pots etc.

b. Non- Durable Goods- They are goods that can only be used once. For example, Bread, Drugs, Egg, Meat etc.

2. PRODUCER/ CAPITAL GOODS: These are goods used by people for further production of goods and services. They are the assets of a business that are used to produce more goods. For example, Motor Car, Building etc. They are used to carry out productive activities.

TYPES OF PRODUCTION:

1. DIRECT PRODUCTION: Is the type of production in which an individual produces goods and services only for family use or consumption. These good are not for sale, rather they are for family use, usually in small quantity.

2. INDIRECT PRODUCTION: Is the type of production in which goods and services are produced in large scale and mainly for sales. This type of production involves the use of modern equipment and skilled labour to be able to make surplus goods.

It is sub-divided into three major groups, which include the following:

a. Primary Production- This involves the extraction of raw materials for the production of goods and services. For example, In Fishing, Mining etc.

FISHING

MINING

b. Secondary Production- This involves the conversion of raw materials into finished goods fit for consumption by the consumers. For example, Processed Foods like Tin Tomatoes, Corned Beef etc

c. Tertiary Production- is concerned with provision of commercial and professional services to people. The goods produced at the primary and secondary production levels are distributed to the final consumer. People involved in this stage of production (i.e. Tertiary) are, Retailers, Transporters, Lawyers, Teachers, Police etc.

FACTORS THAT DETERMINE VOLUME OF PRODUCTION:

1. Amount of Capital- This determines how much is produced. The greater the amount of capital available, the greater the volume of goods produced and vice versa.

2. Availability of Raw Materials- The raw materials available will determine the volume of goods that can be produced.

3. Storage Facilities- When storage facilities are available to store produced goods then this will encourage high level of production.

4. Market Size- Market size refers to the demand of goods produced. The greater the demand for goods, the greater the volume of production.

5. Efficiency of Other Factors of Production- The more efficiency is put into the management of other factors of production like Land, Labour and Entrepreneur; the more volume of production we will get.

IMPORTANCE OF PRODUCTION .

1. It improves the Standard of Living of the people.

2. It provides employment for the people.

3. It increases the wealth of experience of the people.

4. It increases the wealth of the people.

5. It increases the export potential of a country.

6. It ensures availability of goods and services at affordable prices.

7. It eradicates hunger and famine, when goods are available and at affordable prices. Then everyone can afford it.

8. It leads to skill acquisition of people.

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This concludes our session for today. Hope it was fun as well as helpful to you. Until we meet again remain ever Blessed and remember you are for SIGNS & WONDERS. God Bless You.