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Production is the ever-burning word in the minds of business magnets. Whether they may be small scale industry or large scale industry, the size and type of the firm don't matter here, as every individual works his best to attain great success. The success is available in terms of quality and quantity of production for companies. So, what is the meaning of output? Now, let us discuss the meaning of production in economics in detail.


We can define the production in terms of economics. Production refers to the process of using various inputs to obtain the required output. The output is called production. It should be qualitative and quantitative. This is what production stands for in simple words, however, production is a vast topic. So besides knowing its meaning, we need to know its factors, its types, and its significance as well.

Types of Production in Economics

Now that we have understood the meaning of production, we will move on to its types. We have several types of productions since economists have categorized them in multiple ways. The first classification is of four types and these are as follows.

  • Unit or Job Production: It is a single unit of production to a single customer. The name unit indicates the same theory. Restaurants, tailoring shops, bakeries, etc. can come under this category. Its features depend on customer service and support. It depends more on the human resources like skill, communication, etc. than the machinery.

  • Batch Production: It is another essential classification that concentrates on producing a group of products in the same period. Mostly durables and appliances can come under this type of production. The manufacturer will come to know the number of products required before the production starts. It depends on the season. It has a high risk of production if it needs to stop in the middle. FMCG, electronic appliances are examples of this.

  • Mass or Flow Production: It has two names. It applies to large scale industries, as they produce goods in a bulk amount, after completing a lot of production, they start again. It requires huge capital. Car manufacturers belong to this production. It produces in high volumes and considers the standardization.

  • Continuous or Process Production: It has a few similarities with mass production but is a completely different kind of production. Here, the process plays a vital role because the manufacturing process goes on continuously. Brewing is an example of continuous production. It requires machinery more than manual power.

Each type of production involves various processes but implies a common meaning of production in economics.

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So far, we have covered ‘what is meant by production?’ and, ‘what are the types of production in economics?’. Besides these, we have another classification of production based on a process. They are as follows. 

  • Primary Production: It is the first phase of the production process. The collection and extraction of raw materials take place in this stage. It plays a vital role in hardware and large scale industries. In this phase, the collection of funds and investment are essential.

  • Secondary Production: It is the mid-phase of production. It involves both machinery and manual work in parallel. It focuses on the utilization of raw materials effectively to get more productivity. Here we need working capital.

  • Tertiary Production: It is the last and significant phase as all the packaging, and distribution of goods happens here. It is the phase where we can earn returns for our qualitative products. It involves certain risks too.

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These are the three types of production involved in various organizations. Based on the level and category, each plays its roles.

What do You Mean by Production?

Production is a term that refers to the maximum utilization of available resources and undergoes specific processes and produces the goods and services. It is primary and essential for every business, as the returns depend on productivity. So it plays a significant role in the firm.

The definition of production in economics lies in its process itself, whereas the meaning of production explains the necessary actions to gain returns. So a strong understanding of the concept of production helps an entrepreneur to mould his business in such a way, that helps to reduce risks and increase in returns.

FAQ (Frequently Asked Questions)

1. What is the Role of Production in Business?

Ans: The production is a concept of producing goods based on the customer's desire by utilizing both tangible and intangible inputs. The survival of every firm lies in its effective production. It can develop or destroy any business. We have several types of productions, but all aim at the growth of the organization.

It helps to understand the customers, develops social relationships, generates employment, and extracts the creative skill from human resources. It sets the welfare of an organization by its name and fame. It specifies a formal relation between cost and returns after using various factors. Thus production is a crucial factor in business.

2. Describe the Production Function? 

Ans: Production function is a mathematical relationship between the utilized inputs and obtained outputs. It can be shown on a graph for a better understanding of the situation to the owner. The inputs involve all the factors of production. Mathematically it can be displayed as,

Q = f ( L,C,N ) where,

Q = quantity of input

L = land

C = capital

N = Number of labourers

So, plot the Q value on one axis and plotting output on the other axis. A graph will be obtained by joining those points, which explains the production function. It helps to identify the strengths and weaknesses of a particular firm.

3. What are the Characteristics of the Production Function? 

Ans: The production function is a mathematical relation that reflects the relationship between the inputs and outputs of a business. It has three characteristics as follows.

  • Substitutability: It helps to explain how the proportions of land, labour, capital, and other resources will impact the rising or falling of the output so that the entrepreneurs can try to substitute the other factors based on the law of proportion to reduce cost.

  • Specificity: It implies the inputs which specifically have an impact on productivity and substitution cannot be considered in this.

  • Complementarity: As the factors of production are complementary to each other, we can merge the factors and utilize them for optimum production.