Production is the changing of raw materials into finished goods and the distribution and provision of goods and services in order to satisfy human wants. Production is also referred to as the creation of utility. (Utility is the ability of any commodity or services to satisfy human wants).
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TYPES OF GOODS
- CAPITAL GOODS (PRODUCER GOODS): These are goods which are used for further production of goods and services e.g. raw materials, machines, trucks etc.
- 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
- PRIMARY PRODUCTION: This involves the extraction of raw materials from the soil or sea e.g. mining, farming, fishing etc.
- SECONDARY PRODUCTION: This entails the conversion of raw materials into finished or semi-finished products e.g. manufacturing of cars, fan, clothes chemicals e.t.c.
- TERTIARY PRODUCTION: This is the stage where the goods and services made available at the above two stages are taken to those who are in need of them. It includes the activities of those who help to bring finished goods to the consumers e.g. transport, communication, insurance, banking etc.
- Differentiate between producer goods and consumer goods.
- Explain the following terms and show the relationship between them.
FACTORS OF PRODUCTION
The factors of production are the resources that are combined together for production to take place. They are:
- 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.
- 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.
- 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
- ENTREPRENEUR: This is the factor that organizes or co-ordinates other factors of production for more productive purposes. The reward for entrepreneurship is PROFIT
FUNCTIONS OF THE ENTREPRENEUR
- Risk bearing
- He takes decisions relating to the business.
- Co-ordination of other factors of production
- Provision of capital
- He initiates the business.
- Organization of research
THE PROCESS OF PRODUCTION
This refers to the series of activities and stages involved in 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.
- State five characteristics of land as a factor of production.
- List six functions of the entrepreneur.
- The reward for labour as a factors of production is (a) interest (b) profit (c) rent (d) wages
- The factors of production that combines other factors and bears the risk in the production process is (a) Capital (b) Entrepreneur (c) Land (d) Labour
- Goods are given utility by (a) Changing their forms and location (b) Consuming them (c) Costing their value (d) Packing and measuring them
- What is NOT the function of an entrepreneur (a) Bearing risks (b) Deciding on tax to pay (c) Deciding on what to produce (d) Organizing other factors
- The reward for capital as a factor of production is (a) Dividend (b) Rent (c) Profit (d) Interest.
- Define Production.
- List four factors of production.
- What is production?
- Explain the different activities involved in industrial, commercial and service occupations.
- State five factors that have contributed to the growth of Commerce
- Illustrate with a well labeled diagram the main divisions and subdivisions of production
- Explain five reasons why communication is important in Commerce