10.1 Production
Refers to the transformation of factors inputs into outputs.
Types of Production
All economic activities could be categorized under three broad types of production viz.
Primary Production
The primary production deals with all forms of extraction of resources from the earth. These include drilling of liquid substance such as petroleum, mining of solid minerals such as coal, iron ore, gold, and silver, precious stone, aluminum e.t.c and Agriculture which involve fishing, crop production and animal rearing.
Secondary Production
The secondary production involves the transformation these extracted resources into finish product having passed through the industrial processing. The secondary production in other words, has to do with manufacturing of output in industrial set up. A good example of secondary production could be observed at Textile industry that transform cotton into yard or wax when it passes through several stages of production.
10.1 Production
Tertiary Production
The tertiary production involves those services that aid both primary and secondary production to be successful. These services include Banking, Insurance, Transportation, shipping, e.t.c
These services contribute significantly towards the success of the productions and their efficiency equally adds ingredients to the overall functions of production process.
Factors of Production
For output to be obtained, it is necessary to inject inputs which economists referred factors of production, and include the followings
Land
Land is any site economic activity takes place. It could be a water body, land, forest e.t.c land has no cost of production and it is relative fixed in supply. The quality of land and it is usage varies from one place to another and it is subject to diminishing returns. Moreover the land is immobile and free gift nature. Rent is the reward for land.
10.1 Production
Labour
Labour refers to all human effort used in the production process. The success of production depends largely on the quality and quantity of labour being employed to man the affairs of the production labour is mobile and acquires skill through education and training.
Labour can be categorized into skilled, semi-skilled and unskilled in the production particularly in industrial set up the skilled ones are those that have acquired the knowledge in formal school system and they include Managers, Engineers, Accountants and other professionals.
The semi-skilled refers to those category of workers that have acquire the operation skills required to mange production in the industrial set up even through they have not under go regular education as in the case of first category. E.g. machine operators.
The unskilled are those forms of workers that use their energy in the production process. E.g. Guard men, Cleaners etc
10.1 Production
Capital
Capitals are those goods that are required in the production of other goods. Capital is divided into fixed and circulating capital. The reward for capital is interest.
Fixed capital
Fixed capitals are those capitals in production that remain constant in the production process. They include Factory building, Machineries, Generator, and Equipment.
Circulating capital
By circulating capital, it refers to all those capital that change form entirely in the production process. These include raw-materials, labour force size, salary and allowances, running cost, etc
Entrepreneurs
The entrepreneur refers to the person that coordinates and organizes all other factors of production. He determine what to produce and its quantities, he bears risk of production. He is to enjoy the fortunes if successful. The reward for this factor is profit.