The theory of production and distribution
Production is the various economic activities aimed at the creation of goods and service and the distribution of goods and services to the final consumers for the satisfaction of human wants.
It can equally be said that production is the creation of utility, while utility is the satisfaction that a consumer derives from the consumption of commodity.
Types of production
Production is divided into two types and they are direct production and indirect production.
Direct production is the creation of schools and services to satisfy human or household requirements and small school production to meet family needs.Example is like subsistence farming.
Indirect production is the production by specialization for the exchange. That is the producer is not attempting to satisfy his own wants except to a very limited extent. Example I like the plantation Farming mechanised industry, etc.
Classification or Types of Goods
There are two basic types of goods, and they are:
Consumer goods
Producer or capital goods
1. Consumer Goods
Consumer goods are goods that have reached their consumable stage; that is, they are ready for use by the final consumers without undergoing further process of production.
Consumable goods can be durable or non-durable.
a) Durable Goods
Durable goods are goods that can be used over and over again. They are used many times or for many years before they are worn out.
Examples: chairs, shoes, computers, radios, etc.
b) Non-Durable Goods
Non-durable goods are perishable goods that are consumed almost immediately due to their perishable (insecure or unstable) nature.
Examples: tomatoes, bananas, bread, etc.
2. Producer or Capital Goods
Producer or capital goods are goods which can be used to produce other goods and services.
Examples: vehicles, factory buildings, tools, etc.
Other Types of Goods Include
Economic Goods
Economic goods are goods that are useful or valuable and at the same time scarce in their available quantity. They command a price because people are prepared to pay to possess them. They can be utilized and priced according to value and volume.
Non-Economic Goods (Free Goods)
Non-economic goods or free goods are goods that are very useful to human existence and survival. They are not scarce; therefore, they cannot command a price. They are freely available in any quantity desirable to man since they are freely gotten from nature.
Examples: air, rainwater, and sunshine.
Classification of Production
Production is classified into three (3) categories, and they are:
Primary production
Secondary production
Tertiary production
1. Primary Production
Primary production is the first stage of production which is concerned with the extraction of raw materials from land, air, and sea.
It includes farming, mining, oil drilling, crude oil, etc
2. Secondary Production
Secondary production is the transformation and conversion of raw materials into finished goods. At this stage of production, utility is added to the basic raw materials from primary production.
3. Tertiary Production
Tertiary production is the last stage of production. It is concerned with commercial activities and the rendering of both direct and indirect services. It is also concerned with the distribution of goods and the rendering of services to final consumers.
Examples: wholesalers, barbers, hairdressers, teachers, etc.