![]() ![]() One vital economic policy in any country is to increase production thereby enhancing economic welfare. The higher the level of consumption, the higher the standard of living of the people in an economy. Increased production leads to increased consumption. Importance of production Increase in standard of living For example, they produce most cars (in mass) in large factories using conveyor belts and machines like robot arms. ![]() ![]() Flow Productionįlow production refers to where firms produce identical, standardized items on an assembly line. After baking fifty white loaves of bread, it will start baking fifty loaves of chocolate bread. For example, a bakery first produces a batch of fifty white loaves of bread. They finish each batch before starting the next batch. This is where they make a group or groups of items together. This is where firms produce items individually and they make sure that they finish each item before starting the next one. Production is all about creating goods and services and managers decide the most efficient way to organize their inputs for a particular product. They stated that business managers decide the best production methods for running their businesses. The 3 types of productionĪside from the two major categories of production (direct and indirect), some scholars have stated that there are three main types of production. Examples also include government services such as administration, education, and defense. Tertiary industries provide services such as transportation, banking, insurance, legal services, medical services, etc. Firms in all types of industries directly receive these services as well as the final consumers. This is the activity in which tertiary industries carry out with the aim of enabling the finished products to reach the hands of the consumers. We can also say that this activity is the conversion of raw materials and intermediate goods to semi-finished and finished products. Examples include cement production, bridge and road construction, building, brewing of beer, etc. The secondary activity consists of all forms of manufacturing and constructive work. This has to do with transforming the raw materials that primary industries produced into finished products. Secondary industries/occupations carry out this activity. This activity is basically to provide food and raw materials. These industries engage in such activities of extracting gifts of nature from the surface of the earth, underneath the earth’s surface, and from the oceans and seas. We can also refer to primary industries as extractive industries or extractive occupations. Primary industries carry out this activity such as agriculture, mining, oil extraction, etc. We can as well classify industries accordingly, in a wider sense here to mean the areas of human activities. It is important to classify indirect production into three major types (also known as systems or modes of production). This is the act of producing goods and services on a large scale. ![]()
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