SS1 First Term Economics Lesson Note – Theory of Production

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WEEK 6

THEORY OF PRODUCTION

CONTENT

1. Meaning of Production
2. Types of Production

1. Factors of Production

 

Sub-Topic 1:  Meaning and Types of Production

MEANING OF PRODUCTION

Production is any economic activity that is aimed at creation of goods and services for the satisfaction of human wants. Production also includes the distribution of goods to the final consumers. Production involves the creation of tangible goods such as books, vehicles furniture items, bags, footwear etc as well as services (intangible goods) which are capable of satisfying human wants e g services of teachers, lawyers, security officers medical personal etc.

TYPES OF PRODUCTION

Production is broadly divided into two: Direct Production and Indirect Production

1. Direct production has to do with economic activities aimed at meeting household needs. It is usually carried out on small scale, employing mostly family labour. Examples are crop farming, poultry, fishing etc for house hold consumption only.
2. Indirect Production: This involves the production of goods and services on large scale for commercial purpose. Modern equipment and skilled labour are often engaged. The producer makes use of the proceeds of his sales to satisfy his other wants since he cannot produce all he needs.

Production is classified into three stages:

• Primary production
• Secondary production
• Tertiary production

(a) Primary production: This refers to the production of basic raw materials to be used in their natural form or for the production of other goods. It involves majorly the extraction of raw material from the land, sea and air. Examples are mining, quarrying fishing and forest activities.

(b) Secondary production: This is the stage of production where raw materials or semi-finished goods which satisfy consumers’ want. This includes manufacturing and construction of building, roads bridges.

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