1. Production is the process of adding value to goods and services for earning a motive through transforming inputs into outputs over time using technology. 2. According to Hicks, production is any physical or mental activity directed towards satisfying other people's wants through exchange. 3. The four factors of production that help convert raw materials into final outputs are land, labor, capital, and entrepreneurship.

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2. MEANING OF PRODUCTION
 Production is the process of adding value( value
addition) to the goods & services for earning
motive.
 Production is the transformation of inputs into the
output of a commodity in a specific period of time
at the given state of technology.

3. Acc. To Hicks, “Production is an activity
whether physical & mental, which is
directed to the satisfaction of other
people’s wants through exchange.”

4. 1. No production is possible without some sort of
activity. ( Physical & Mental )
2. The activity must be directed to the
satisfaction of other people wants.
3. The other people wants must be satisfied
through a process of exchange.

5. TOTAL PRODUCTION
Total quantity produced with the given
quantity of inputs is total production.

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AVERAGE PRODUCTION
This is per unit production of variable factor.
Avg. production = Total Production
Units Of Variable Input

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MARGINAL PRODUCTION
Marginal production is net addition to total production
by addition of one more unit of variable input.
Marginal production = Change In Total Production
Change In Units Of Variable Input
M.P. = T.Pn-T.Pn-1

8. Factor of production are the agent of
production. They help in production process of
converting raw material into final outputs.
They are- Land, Labour, Capital &
Entrepreneur.

9. Acc to L.M. Fraser, “ Land stands for
all natural resources which yield
income or which have exchange value.”

10. Land includes all free gifts of nature
which are used in production process. It
includes air, sunlight, water etc.
Rent is given as a reward for the use of
land.

11. 1. Land is a free gift of nature.
2. The supply of land is fixed.
3. Land has original properties.
4. Land is immovable.
5. All land is not homogeneous.

12. Labour includes all mental & physical
efforts provided by the employees to the
production process.
Wages & salaries etc. are given as a
reward for the use of labour services.

13. 1. VARIABLE INPUTS:- The output which can
be changed with change in output in
short period.
2. FIXED INPUTS:- The input which cannot
be changed in short period with increase
in production.

14. ELEMENTS NECESSARY FOR PRODUCTION:-
1-THE CREATION OF UTILITY
(SATISFACTION).
2- THE PRESENCE OF EXCHANGE
VALUE IN THE PRODUCTION.

15. FORMS OF ECONOMIC UTILITY
1-FORM UTILITY It is created by changing the
shape or form of things &
thereby making them useful. For
ex-converting wood into
furniture.
2-PLACE UTILITY Creating by transporting things
from one place to another. For
ex- bringing sand from the
banks of the river to cities.

16. 3- TIME UTILITY Utility can be increased by keeping
things stored for sometime, such
as old rice become better in quality
with the passage of time.
4- POSSESSION
UTILITY Change of ownership or transfer of
goods from one person to another
also create utility. For ex- books in
the store of a bookseller.

17. 5- SERVICE
UTILITY
Service rendered by doctor,
lawyers & teachers.
6- KNOWLEDGE
UTILITY
scientific advance & improvement
in the knowledge level of the
consumers also increase utility.
for ex- Advertisement of various
things on T.V

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