PRODUCTION
Goods and services
A business in any organisation that makes good or provides services.
Goods are physical products, for example clothes. They can be divided in two categories:
NON-DURABLE goods, which don’t last very long, for example a flower;
DORABLE goods, which last long time, for example a book
Services are non-physical products. They’re actions that people perform to assist other.
For example, education.
Goods and services are produced to meet the needs and wants of consumers.
Needs are things we cannot do without. Basic needs include food and water.
Want are things which aren’t really needed, but make people’s life much easier. You could
live without it. For example, smart-phone.
In the past when cars were first invented, they were considered a luxury. Today cars have become
a part of modern life and many people consider them to be an essential need.
Economic resources: factors of production
These resources are known as factors of production. There are four factors of production:
Capital : the money available to buy natural resources and as well as the physical assets
used to produce goods and services.
Labour : the number of people who can and want to work.
Enterprise : the people who set up businesses.
Land : the earth and oceans and the plants, animals and raw materials which come from
them.
Because there is a limited supply of resources, it is important to use then efficiently to maximise
the amount that can be produced.
The three sectors of production
PRIMARY PRODUCTION: consists of industries which acquire the raw materials to makes
other products. Industries which extract or produce materials from the land and sea.
For example, farming.
SECONDARY PRODUCTION: converts these raw materials into finished goods. Industries in
this sector are involved in manufacturing, construction, processing and production.
Example of products cars.
TERTIARY PRODUCTION : provides services which assist and give commercial, personal and
financial support to producers and consumers. Over the last decades this sector has
become very important in the world economy both for employment and for the production
of national income.
For example, shopping centre.
