Production is the process of changing the raw materials into finished product. In the chapter's example, sugarcane, machinery and labours are the input (the factors of production) and sugar is the output. This unit explains the meaning of production, utility, the three types of production and the four factors of production – land, labour, capital and entrepreneur – with their characteristics.
1. Meaning of Production
From Sugarcane to Sugar – An Example
- Sugarcane is cultivated in agricultural fields. This is the primary production.
- Sugarcane is taken to the sugar factories, where sugar is produced using machines. This is the secondary production.
- Like sugar industries, many other industries are known as secondary sectors and are generally described as manufacturing sectors.
- The tertiary sectors provide all those services which enable the finished goods to reach the hands of the consumer. These include traders, banking, insurance, etc.