Production

Production=the process of turning input into output

Firms=units that make decision during production

Goods/services

Producer goods (capital goods)/consumer goods

Private goods/ public goods→depending on whether the consumption on the goods is rival and excludable

Primary production/ secondary production/ tertiary production

They are interdependent

Division of labour

Simple division of labour/ complex division of labour/ regional division of labour

Advantage

1. Increase average labour productivity

2. Raising living standards

3. Saving capital goods and use them more efficiently

Disadvantage

1. Work becomes boring

2. Greater risk of unemployment

3. Greater degree of interdependence among production stages

4. Products becoming too standardised

Limitation

1. Nature of goods

2. Size of market

3. Trade barriers