what is production
what is production

What is production?

Production can be defined as the production of goods and services which satisfy human wants. It can also be defined as the process of transforming raw materials into finished goods and their distribution to the consumer to satisfy their wants.

All goods and services produced must have the unique attributes of satisfying certain human wants.

Production includes the creation of goods such as cars, tables, pens, books, torches, computers, etc. Unlike production where goods are produced services are rendered by some professionals such as soldiers, police, teachers, lawyers, mechanics, etc.

Types of production

Production is grouped into two major categories.

  1. Direct
  2. Indirect
  1. Meaning of direct production: this is a type of production whereby individuals produce goods and services for the use of their family or consumption. The goods and services produced in direct production are not for sales, and it is usually small in size.
  2. Meaning of indirect production: this is types of production in which goods and services are produced in large scale and they are prepared for sales or exchange for other need. This type of production involves the use of modern equipment and skilled labor to be able to make surplus goods and services that the produce would exchange to get money, which he will use to satisfy other wants. A producer can’t satisfy all his wants without depending on other people in markets for the exchange of goods and services.

Indirect production is subdivided into three major groups:

  1. Primary
  2. Secondary
  3. Tertiary 
  1. Primary production: this refers to the extraction or modifying of raw materials provided by nature. It is the process of obtaining raw materials or resources from the land air and water. Example of primary production includes agriculture, mining, Lumbering, fishing and lot more.
  2. Secondary production: this involves the transformation of raw materials or semi-finished goods into final materials that are acceptable to the consumers. The raw materials obtained from the extractive sector (primary production ) are transformed into finished goods such as houses, food, chair, cars, cloth, roads, etc.
  3. Tertiary production: tertiary production is concerned with the provision of commercial and services to the people. The goods produced at the secondary and primary production levels are distributed to the people for consumption. The people involved in tertiary production include those in the commercial services like wholesalers, retailers, transporters also people in the professional services like soldiers, policemen, doctors, lawyers, etc.


Factors that determine the volume of production

  1. Amount of capital – the amount of capital available for a producer to produce goods determines the volume of goods he will produce. The production of goods based on the amount of capital is vice versatile “The higher the amount of capital the higher the volume of production” or “the lower the amount of capital the lower the volume of goods to be produced”
  2. Availability of raw materials – The raw materials available will surely determine the volume of production therefore, the more the raw materials available, the greater the volume of production.
  3. Management – the management put in place for the production of goods and services determine the volume of production. Skilled or experienced management will increase the volume of production.
  4. Level of technology – The use of modern technology for the production of goods leads to a high volume of production while local technology will drastically reduce the volume of production.
  5. Nature of goods – The nature of goods determines if the goods can be stored for a long period or a short period. Therefore, perishable goods can not be stored and It also leads to a low volume of production.
  6. Storage facilities – when storage facilities are available for storing produce goods, this will lead to a high volume of production.
  7. The market size – the size of the market refers to the demand for goods produced. The higher the demand for the goods; the greater the volume of production.
  8. The efficiency of other factors of production – the more powerful the other factors of production, the more the increase in the volume of production.

Importance of production;

  1. Availability of goods and services – availability of goods and services are made available for use by human beings.
  2. Improvement in standard of living – it helps to ensure adequate improvement in the standard of living of the people.
  3. An increase in export potential – it also helps or assist a state or nation to boost her export of goods and services to other nations.
  4. Acquisitions of skills – the commitment of people in production make them acquire special skills.
  5. An increase in the wealth of people – also assists people to accumulate wealth as a result of continuous employment.


Leave a Reply

Your email address will not be published. Required fields are marked *

Sign Up for Our Newsletters

Get notified when we upload or updated a new article.

You May Also Like


  what is roadside trading? Roadside trading can be defined as the…

Hazard of news reporting

In this section, you are going to learn and understand the hazard…

what is franchise? – In Government

Table of Contents What is franchise?Types of franchiseLimited or restricted franchiseMerit of…

what is comprehension and how to write a good comprehension

what is comprehension? Comprehension is the ability to understand written text, spoken…