BUSINESS SECTION 5

Production

The process of transforming raw materials into goods or services.

Productivity

A measure of output produced from a given level of input, calculated as quantity of output/quantity of input.

Factors of Production

Include Land (natural resources), Labor (physical and mental contributions), Capital (man-made items), and Enterprise (bringing factors together for profit).

Types of Capital

Fixed (durable equipment), Working (for daily operations), Venture (funds for startups).

Methods of Production

Job, Batch, Flow, Lean production methods.

Types of Production

Extractive (obtaining raw materials), Construction, Manufacturing, Service industries.

Levels of Production

Subsistence, Domestic Consumption, Surplus, Export.

Economies of Scale

Advantages of larger businesses in producing more at lower unit costs.

Diseconomies of Scale

Result in higher unit costs with increasing output or sales.

Cottage Industry

Small-scale industry in homes using local materials.

Small Businesses

Play a vital role in employment, services, and niche markets.

Growth

Internal (new products, more sales) and External (mergers, joint ventures) growth types.

Linkage Industry

Connected to other industries providing supplies or markets for products.