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Hello students! Have you ever thought how cotton which is grown in a village is converted into beautiful dresses that you wear everyday. How is this made possible? The answer to this is, production process, which you will learn in this chapter. In this chapter we will learn about
- The meaning of production.
- The types of production.
- The types of factors of production.
- The characteristics of factors of production.
Meaning of production:
Production and consumption are two main activities in an economy. Similarly, there are two kinds of people, producers and consumers. The interaction between producers and customers is vital for both of them. Consumers play a dual role here. Consumers can be both customers of the producers and suppliers to the producers.
1. Production is a process of combining various material inputs and immaterial inputs in order to make something for consumption (output).
2. Production in economics refers to the creation of goods and services having exchange value. e.g. Conversion of cotton to cloth requires a production process.
It merely means creating utilities for individual. Meaning of Utility means satisfying power of a product.
Utilities types: Form utility, Time utility and Place utility.
Types of Utility
Form utility: If the physical form of a commodity is changed, its utility may increase.
Example:
Cotton value increases, if it is converted into clothes.
Place utility: If the commodity is transported from one place to another, its utility may increase.
Example:
If rice is transported from Tamilnadu to Kerala, its utility will be more.
Time utility: If the commodity is stored for future usage, its utility may increase.
Example:
Agricultural commodities like Potato, Wheat, etc., are stored for consumers' regular uses throughout the year.
Types of Production
There are three main types of production
1. Primary production
2. Secondary Production
3. Tertiary or Service Production
2. Secondary Production
3. Tertiary or Service Production
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