In this class, we will discuss production. Enjoy the class!

Production

CONTENT

1. Types of goods

2. Classification of production

3. Factors of production

4. The process of production

Definition of production

Production is the changing of raw materials into finished goods and the distribution and provision of goods and services to satisfy human wants.

Production is also referred to as the creation of utility. (Utility is the ability of any commodity or service to satisfy human wants).

Types of goods

1. Capital goods (producer goods): These are goods which are used for further production of goods and services e.g., raw materials, machines, trucks etc.

2. Consumer goods: These are goods and services which are ready for use by the final consumer, e.g., bread, milk, services of a teacher, etc.

Classification of production

1. Primary production: This involves the extraction of raw materials from the soil or sea, e.g.mining, farming, fishing etc.

2. Secondary production: This entails the conversion of raw materials into finished or semifinished products e.g., manufacturing of cars, fans, clothe,s chemicals etc.

3. Tertiary production: This is the stage where the goods and services made available at the above two stages are taken to those who need them. It includes the activities of those who help to bring finished goods to the consumers e.g. transport, communication, insurance,banking etc.

Evaluation

1. Differentiate between producer goods and consumer goods.

2. Explain the following terms and show the relationship between them.

Factors of production

The factors of production are the resources that are combined for production to take place. They are:

1. Land: This refers to the resources provided free by nature e.g. soil, sunshine, rain, minerals, forest, fishing grounds, etc. The reward for land as a factor of production is RENT.

2. Labour: Labour is the physical and mental efforts of man directed to the production process. Labour may be unskilled, semi-skilled, or skilled. The reward for Labour is WAGES.

3. Capital: This is the resources or wealth made by man that is used for producing further wealth, e.g., machinery, motor vehicles, cash, e.t.c

4. Entrepreneur: This is the factor that organizes or coordinates other factors of production for more productive purposes. The reward for entrepreneurship is PROFIT

Functions of the entrepreneur

1. Risk bearing

2. He makes decisions relating to the business.

3. Co-ordination of other factors of production

4. Provision of capital

5. He initiates the business.

6. Organization of research

The process of production

This refers to the series of activities and stages involved in the creation of goods and services, as well as getting them to the final consumer who will use them. Production is said to be complete when the goods and services produced reach the final user or consumer. Therefore, the production process includes the stages or activities of those who aid production and trade, e.g., transport, warehousing, etc.

Evaluation

1. State five characteristics of land as a factor of production.

2. List six functions of the entrepreneur.

Theory

1. Define Production.

2. List four factors of production.

General evaluation

1. What is production?

2. Explain the different activities involved in industrial, commercial, and service occupations.

3. State five factors that have contributed to the growth of Commerce

4. Illustrate with a well-labelled diagram the main divisions and subdivisions of production

5. Explain five reasons why communication is important in Commerce

In our next class, we will be talking about the Division of Labour, Specialization, and Exchange.

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