Know More About Theory Of Production

INTRODUCTION
Production can be defined as the various economic activities aimed at the creation of goods and the distribution of the goods and services to the final consumers for the satisfaction of human wants.

Production can also be defined as the creation of utility. All goods and services must possess utility. That is to say that they must be capable of satisfying certain human wants.
Production is the creation of tangible goods such as clocks, TV sets, tables, books and houses as well as services rendered by some professionals such as doctors, soldiers, lawyers, police, teachers, hairdressers and auto-mechanics.

It should be noted that production is said to be complete when the goods and services produced get to the final users or consumers. The production process involves three major groups of people. They are producers/manufacturers, distributors and consumers.

Goods and services can be classified into two main categories. They are consumer goods and producer/capital goods.

1. Consumer Goods
These are goods and services that can satisfy the consumer's immediate needs. These goods do not require further production process for their use by the consumers. Examples of consumer goods are motor cars, milk, cake, the services of a soldier, police, nurse, barber and lawyer.

Consumer goods can be grouped into two classes, namely; Durable and Non-durable goods.

• Durable goods: Durable goods are goods that can be used over and over again. They are used many times or for many years before they get worn out. Examples are radio, television set, table and spoon. They are generally known as Consumer Durable Goods.
• Non-durable goods: These are goods that are used up from one use. In other words, they are used up just at once. Examples are meat, bread, egg, milk and drugs.

2. Producer or capital goods
They are goods used by people to produce some other commodities or services. Examples are buildings, motor cars, lorries, tailor's tools and machines. These goods are used to carry out productive activities. 

TYPES OF PRODUCTION
Production is grouped into two main categories, namely: Direct and Indirect production.

1. Direct Production
Direct production is the type of production in which an individual produces goods and services only for family use or consumption. The goods or services  so produced are not for sale, rather they are to be used by the family. It is usually very small in size and family labour is usually employed.

2. Indirect Production
It is the type of production in which goods and services are produced in large scale, mainly for sales or exchange for other needs. This type of production involves the use of modern equipment and skilled labour to be able to make surplus goods and services that the producer would exchange to get money, which he will use to satisfy other wants. It is practically impossible for a single producer to satisfy all his wants without depending on others for exchange of goods and services.

Indirect production is divided into is sub-grouped into three major groups, namely: primary, secondary and tertiary production.

1. Primary production: It refers to the extraction of raw materials provided by nature. It deals with the process of obtaining raw materials or resources in their natural form from the land, air or water. It forms the basis for further production. Examples are mining, agriculture, lumbering and fishing.
2. Secondary production: It involves the transformation or conversion of basic raw materials or semi-finished goods into final forms that are acceptable to the consumers. The raw materials obtained from the extractive sector are transformed into finished products such as houses, roads and cars.
3. Tertiary production: It deals with the provision of commercial and professional services to the people. The goods produced at the primary and secondary levels of production are distributed to the people for consumption. Examples are police, doctors, hairdressers and soldiers.