Production Process:
Production is a process that transforms factors of production or inputs into output of goods and services. Production may be classified into extraction, manufacturing, commerce and direct services. The factors of production which are used to create goods and services are land, labour, capital and entrepreneurship. The relationship between inputs used and the maximum output that can be produced at a given time period using an existing technology is depicted by the production function. Production may be organised in the short-run or long-run period.
The concept of division of labour may be applied to production. It involves dividing a production process into a number of smaller tasks for each task to be undertaken by a different worker. It has various advantages as well as disadvantages.
Firms are the agents of production (they carry out production). In locating a firm, various factors such as sources of raw materials, labour, power and others should be considered.A firm may be established as sole proprietorship, partnership or corporation.
The policies of privatisation, commercialisation, nationalisation and deregulation can be used to restructure an economy for improved performance but the demerits of them should be taken care of.