ECONS 101

PRODUCTION

Hey Guyz, Happy Friday 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. JESUS IS LORD!!!

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.

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.

This brings us to the end of today's session. So pls do go through thoroughly and understand. Hope this was very helpful to you, leave a comment of what you think of this tutorial and your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.