Production Introduction
In Business Economic production refers to the creating goods and
services useful various inputs at such as capital, Labour and
organization. It involves transforming raw materials or resources into
finished products or Service that satisfy consumer needs and wants.
The Goal of production is to maximizing effective and output
minimising resources Services.
Definition "Production is the organised activity of transforming
finished goods” The objective of production the demand resources is
satisfy for such transform. -James Bates and J.R Parkinson-
Production function technique maximize is the relationship telling
Amount of output Capable of being produced by each It is set of and
every define specified inputs for a given technical. – Samuelson-
TYPES OF PRODUCTION
For General purposes it is necessary to Classify category into three
main
1) Primary Production
2) Secondary Production
3)Tertiary Production
Primary Production : It is earned out by extractions industry like
Agriculture, Forestry, Fishing, mining and all extraction. This
industry are engaged in such activity extracting the gifts nature
from the earth surface.
Secondary Production : This including production in
manufacturing industry turning out Semi-finished goods and
finished goods from raw materials and intermediate goods
convention of floar into The bread etc. finished goods. They are
generally described as manufacturing and constructive industry
such as manufacturing of cars, furniture clothing and chemicals as
engineering and building.
Tertiary Production :
Industry in the tertiary sector producer all though services which
enable the finished goods to be put in the hands of consumer in
fact the services or Supply to the firms in all types of industry and
directly to consumer. Example to cover distribution, Banking,
Insurance, transport and communication. Government services
Such as low administrative, Education, health and defence are also
included.
FACTORS OF PRODUCTION
production of a commodity or service requires the use of certain
resources or factors of production since most of the resources
necessary to carry on production are scarce relative to demand for
them they are called economic resources
FUNCTIONS OR OBJECTIVES OF PRODUCTION
The entrepreneur in modern business perform the following fuctions:
1)DECISION MAKING : The primary task of an entrepreneur is to
decide the policy of production. An entrepreneur is to determine
what to produce, how much to produce, how to produce, where to
produce, how to sell and’ so forth. Moreover, he is to decide the
scale of production and the proportion in which he combines the
different factors he employs.
2) Management Control: Earlier writers used to consider the
management control one of the chief functions of the entrepreneur.
Management and control of the business are conducted by the
entrepreneur himself. So, the latter must possess a high degree of
management ability to select the right type of persons to work with
him.
3) Division of Income: The next major function of the
entrepreneur is to make necessary arrangement for the division of
total income among the different factors of production employed by
him Even if there is a loss in the business, he is to pay rent, interest,
wages and other contractual incomes out of the realised sale
proceeds.
4)Risk-Taking and Uncertainty: Risk-taking is perhaps the most
important function of an entrepreneur. Modern production is very
risky as an entrepreneur is required to produce goods or services in
anticipation of their future demand.
Broadly, there are two kinds of risk which he has to face. Firstly,
there are some risks, such as risks of fire, loss of goods in transit,
theft, etc., which can be insured against. These are known as
measurable and insurable risks. Secondly, some risks, however,
cannot be insured against because their probability cannot be
calculated accurately. These constitute what is called uncertainty
(e.g., competitive risk, technical risk, etc.). The entrepreneur
undertakes both these risks in production.
5) Innovation:
Another distinguishing function of the entrepreneur, as emphasised
by Schumpeter, is to make frequent inventions — invention of new
products, new techniques and discovering new markets — to
improve his competitive position, and to increase earnings
Production function is a concept in Economic in that explains the
relationship between physical output and the Input. output refers to
number of goods or services producer in a given time period. Input
on the other hand, is the number of resources or materials that are
used to produced output.
while production is simply the process of creating goods and services
for consumption. Production function is the concept explaning
quantitative relationship the input and output. There are four main
components of the Production function.
The formula is Qx = f (N,L,K,O, T)" function
Qx =Quantity of output x
f = functional relationship
N= Land
L= Labour
K =Capital
0 = organization
T = Stale of Technology
Important production function
1) It refers to the relationship between the quality of output of
production and the input of production or factors of production.
2) It explain the amount of output that can be producer according to
quantity of input.
3) Four main factors of production exists, Land, Labour, capital and
organization.
4) There are two types of factors of production (1) fixed factors (ii)
variable factor.
5) fixed factors refers to those aspect of production that remains the
same regardless of changes in output.
6) variable factors are those that may change as output changes.
Types of production function
1) Short run production function
2) Long run production
Short run Production function:
It is the relationship between specific variable inputs and quantity of
output. In the short only one production function factor is variable, y,
other remains fixed.
Long run Production function :
It is the relationship between all Inputs and the quantity of output. In
the long run function, all factors of production or input are variable