Means and Function of Production

Types of Production

Production is the economic activity through which individual and household consumable goods and services are produced. In the course of economic activities, keeping in view the present and future needs of goods and services through productive units, the work of increasing social capacity is also done.

These business institutions are major components of the economic system. These mock entities have been created by individuals or households to organize and facilitate production. The actual characteristic of a business firm is that it purchases factors of production such as land, labour, capital, intermediate goods, and raw materials from households and other business firms, etc. By converting these resources into various goods or services the business firm sells them to customers, other business firms, and various units of the government as well as abroad.

Definition :

According to Bates and Parkinson:

“Production is the organized activity of transforming resources into finished products in the form of goods and services; the objective of production is to satisfy the demand for such transformed resources”.

According to J. R. Hicks:

“Production is any activity directed to the satisfaction of other peoples’ wants through an exchange”.

According to the above definition, in economics, we do not treat the mere making of things as production. What is produced must be designed to satisfy the consumer.

What production does not include :

All the work done to fulfill the needs of customers is a part of the production. People who provide services like carpenters, solicitors, bus drivers, postmen, and clerks are a part of the process of being satisfied as farmers, miners, factory workers, and bakers. The measure of the productiveness of a work is whether someone will buy its final product or not. If we buy something, we need it; If we are not willing to buy it, then economically we don’t want it.