Importance And Factors That Determine The Level Of Production

FACTORS THAT DETERMINE THE LEVEL OF PRODUCTION

1. Amount of capital: The amount of capital available to a producer determines the volume of production. The greater the amount of available capital, the higher the volume of production and vice versa.


2. Management: The management, put in place for the production of goods and services goods and services, determines the volume of production. Effective and efficient management increases the volume of production and vice versa.

3. Availability of raw materials: The raw materials available determine the volume of production. The more the raw materials, the greater the volume of production and vice versa.

4. The market size: The size of the market means the demand for goods produced. The greater the demand for the goods, the greater the volume of production and vice versa.

5. Efficiency of other factors of production:  The more the efficiency of other factors of production, the more the volume of production and vice versa.

6. Storage facilities: When storage facilities are available for storing produced goods, this will lead to or encourage high volume of production.

7. Nature of goods: If the goods produced are durable, they can be stored and this encourages high volume of production but perishable goods that cannot be easily stored can lead to low volume of production.

8. Level of technology: The use of modern technology do lead to high volume of production as against the use of local technology, which can never increase the volume of production.

IMPORTANCE OF PRODUCTION
Production is important because of the following reason:

1. Availability of goods and services: It helps ton ensure that goods and services are made available for use by human beings.

2. Improvement in standard of living: Production helps to ensure adequate improvement in the standard of living of the people.

3. Increase in wealth of people: Production assists people in accumulating wealth as a result of continuous employment.

4. Provision of employment: It ensures the employment of many people.

5. Increase in export potential: Production assists a nation or state to boost her export of goods and services to other nations.

6. Acquisition of skills: The engagement of people in production makes them to acquire special skills.