Meaning of Production

Meaning of Production:

Production in Economics refers to the manufacture of those goods and services that have exchange value. This means the creation of utilities. Such utilities are in the nature of form utility, place utility and time utility. Manufacture of such utilities outcomes in overall raise in the production and redistribution of goods and services in economy. Utility of a commodity might rise due to numerous reasons.

Form Utility:

When the physical form of a commodity is altered, its utility might raise. For illustration, the utility of cotton rises, if it is transformed to clothes. The other illustrations are processing of paddy into rice, butter into ghee and wheat into flour.

Place Utility:

When a commodity is transported from one place to the other, its utility might increase. For illustration, when rice is transported its utility will be more.

Time Utility:

When the commodity is stored for future practice, its utility might rise. During rainy season, water is stored in reservoirs and it is employed at later time. This augmented the utility of that stored water. Agricultural commodities such as paddy, oilseeds, wheat, pulses are stored for regular utilizations of consumers all through the year.

Possession Utility:

Commodities in the transaction procedure, transform from one person to the other. Commodities in the hands of producers encompass some utility and by the time they arrive at consumers via traders and their utility is augmented. Such utility due to ownership or transfer of ownership of the commodity is termed as possession utility. For illustration, paddy in the hands of producers, that is, farmers encompass less utility as compared to that of the rice in the hands of consumers.

 

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