Business, Legal & Accounting Glossary
The process of transformation of inputs into productive outputs is referred to as production. The production process involves the conversion of resources or factors of production into goods and services.
Resources used in the process of production can be of a single type or a combination of several resources. The major types of resources used in production include:
Resources that are supplied directly by nature are categorized under natural resources. These resources are generally supplied by the primary sector and mainly include raw materials. Some of these resources are renewable. Non-renewable resources can also be used by recycling.
These resources are mainly supplied by the secondary sector. These are generally man-made resources that can be used in the manufacturing of other types of products. These resources can also be used in making final goods. Capital resources are significant in the process of production as deficiency of these resources can lead to inadequate supply.
Services offered by humans in the process of production are referred to as human resources. The commonest human resource is labour, which is extremely significant in the process of production. In the production process, human beings exchange skill and time with wages.
Production is the process of converting inputs into outputs that are ready for sale. In the process of production, there are four major factors that must be taken into account.
Land, a natural resource that usually comprises the upper surface of the earth. All-natural forces associated with land are considered as a common factor of production. Air, water, sunlight all are amount to this single factor land. Land is a passive factor of production that has to be made active in order to involve in the process of production.
Labour is a man-made factor. The effort given by humans is termed as labour. Each individual encompasses various levels of skills, qualities, and qualifications and receives wages according to their skills. The effort that is taken by humans to convert natural resources into active resources is labour.
Man-made physical goods that are used to produce other goods is called capital. Capital can be any type of machinery, money or tools that are used in the process of production.
The brain behind managing all the above factors of production is enterprise. Enterprise is responsible for monitoring the proper use of factors of production.
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This glossary post was last updated: 25th April, 2020 | 4 Views.