Chapter 7: Production
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Chapter 7: Production. Definition:. Production is the process of turning resources into goods or services. Production. Types of goods. Capital (producer) goods = goods produced for helping production. Consumer goods = goods produced for direct consumption. Production.

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Chapter 7: Production

Definition:

Production is the process of turning resources into goods or services.


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Production

Types of goods

Capital (producer) goods

= goods produced for helping production.

Consumer goods

= goods produced for direct consumption


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Production

Three types / stages of production

Primary production

Secondary production

Tertiary production


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Primary Production

Primary production refers to all productive activities that directly utilise natural resources in production.

Examples: farming, fishing and mining


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SecondaryProduction

Secondary production is the process of turning raw materials into semi-finished or finished products.

Examples: paper-making, garment-making and production of MP3


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Tertiary Production

Tertiary production refers to the provision of different kinds of services.

Examples: teaching services, transport services and medical services


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Interdependence of the Three Types of Production

Consumer goods and producer goods

Secondary Production

Food and raw materials

Consumer goods and producer goods

Primary Production

Services

Food

Tertiary Production

Services


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Specialisation (division of labour)

Definition:

Division of labour means a worker concentrates on producing (specialises in doing) a good, or part of a good.


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Classification of division of labour

Three types ofdivision of labour:

  • Simple division of labour

  • Complex division of labour

  • Regional division of labour


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Classification of division of labour

Simple division of labour:

When a worker specialises in producing aparticular product or service.

- Usually found in primitive societies


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Classification of division of labour

Complex division of labour:

When each worker specialises in a

particular production stage of a

good or service.

- Found in modern societies


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Classification of division of labour

Regional division of labour:

When a region, district or a

country specialises in

producing a good or service.

e.g.


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Advantages of division of labour

1. Raising labour productivity

2. Saving resources from the production of capital goods

3. Improving the standard of living


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Classification of division of labour

1. Raising labour productivity

Measurement of productivity:

quantity of output produced per unit of

labour over a period of time

e.g. Labour A: 3 toys per labour per hour

Labour B: 5 toys per labour per hour

Which labour is more productive?


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Classification of division of labour

1. Raising labour productivity

Labour productivity is increased if:

a. more output / labour or

same output is produced with

less labour


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Classification of division of labour

1. Raising labour productivity

Reasons:

a. Choosing the most suitable person

for a job

b. Practice makes perfect

c. Saving time in training


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Classification of division of labour

1. Raising labour productivity

d. Saving time in moving around

operations

e. Making full use of capital goods

f. Mechanisation

Any difference between e. and f.?


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Classification of division of labour

2. Saving resources from producing capital goods

Fewer tools and equipment are

Required save resources


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Classification of division of labour

3. Raising the living standard

Division of labour  larger output

Exchange  broaden consumption

variety

∴ higher living standard


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Defects / disadvantages of division of labour (P.11)

1. Work becomes dull and monotonous

 lower labour productivity

2. Greater degree of interdependence

Disruption in one stage badly affects

other stages.


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Defects / disadvantages of division of labour (P.11)

3. Greater risk of unemployment

- when the demand for their skill drops

4. Decline in the quality of craftsmanship

- standardized products versus

hand-made products


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Limitations of division of labour (P.13)

a. Size of the market

- Mass production requires

huge (large) market

b. Nature of the product

- Work that requires individuality is

not suitable for division of labour


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