Meaning of Production
Production is simply the process of converting raw materials or other inputs such as ideas into finished goods or services.
Production is also the process of making or growing something for sale. It is the process of creating utility. All goods and services produced must be able to give value to the consumers.
TYPES OF PRODUCTION
Production is grouped into 2 major categories. They are:
- Direct Production: This involves production of goods and services on a small scale. It is usually done by an individual for the purposes of his/her family use or consumption. The goods produced are meant for the family use alone and not for sale.
- Indirect Production: Goods and services are produced on a large scale. Indirect production is sub divided into: a. Primary Production. b. Secondary Production. c. Tertiary Production
- Primary production: Primary production refers to the extraction of basic raw materials from their natural location as provided by nature. Examples of primary production are agriculture, fishing, mining etc.
- Secondary Production: Secondary production involves the transformation or conversion of raw materials or semi-finished goods into final forms that are acceptable to the consumers. Examples are houses, cars, food, etc.
- Tertiary Production: This ensures goods produced at the primary and secondary levels are distributed to the final consumers. This also includes all kinds of service industries such as transportation, communication and tourism.
IMPORTANCE OF PRODUCTION
Production is important for the following reasons
- Production helps to improve our standard of living
- Provision of employment opportunity
- Production makes goods and services available
- Production helps to increase export potentials
- Production increases the wealth of the people
- Production helps people to acquire special skills
- Production can lead to specialization
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