Meaning of Production Video Lecture | Business Economics for CA Foundation

let's see what is production
what is production what do you think is
production production when we generally
think what comes to our mind is
manufacturing something or creating
something or making something but that
is what we think in our common in our
general parlance this is the
understanding that we have in our common
parlance that is making something
material now what does material mean
here material here means something which
is tangible something which is in the
form of material which is physical so
this is what we understand generally
about production but let's see what is
production in economics production in
economic means conversion of resources
of nature to satisfy human wants it is
the conversion of resources of nature
now there are three things here first is
the natural resources and these natural
resources are converted into some other
form we call them finish good this is
the conversion process so natural
resources are the raw materials or the
inputs these are the inputs or the raw
materials which are converted by some
process may be manual
maybe with the help of machines or
automatically so natural resources act
as the raw materials or the inputs and
these inputs or raw materials are
converted by some process into some
outputs that is the finished goods now
the question is why do we convert these
natural resources or the inputs into the
outputs the answer is to satisfy human
wants so that we can satisfy the human
wants the sole objective of conversion
of inputs into outputs raw materials
into finished goods is to satisfy the
human bond we convert wood into paper we
convert wood into chairs and tables so
that our bonds can be satisfied it is
also the activity directed towards
satisfaction of wants of people by
converting physical inputs into physical
output that means the physical inputs
are converted into physical outputs at
us there are some tangible inputs there
are some tangible resources which are
given to us by the nature and what we do
is we convert those resources into
something else and why do we do that to
satisfy the human wants
for example we convert cloth for example
we convert cotton to cloth from cotton
we make cloth to satisfy our want of
wearing clothes of currying ourselves
now can we cover ourselves or can we
wear cotton no we cannot wear cotton in
its raw form so what we do is we convert
it from its crude or raw form into cloth
which can be worn
likewise even the intangible services
like the services of doctors lawyers
some other professionals like teachers
actors dancers etc also come under the
definition of productions in economics
because doctors and lawyers also provide
their services to satisfy human bonds I
want someone to fight my case in the
court I therefore go to a lawyer he
fights the case for me he satisfies my
one
I feel ill today so I go to a doctor to
get well doctor prescribes me medicine
checks me and prescribes me medicine so
he is giving his services to me he
satisfying my phone
so not only some things which are
tangible are included in production
services which are intangible are also
included in production now the important
thing to understand here is the
important thing to note here is that
production does not mean creation of
matter it doesn't imply creation of
something or anything because man has
inherent limitations man can never
become a creator he can only exploit or
manipulate what is available in this
world what is available on earth he
cannot create anything by himself
it is only God's domain to create so man
can exploit what God has created and
change its form into something which
gives him utility into something which
satisfies his wand
so in short production is creating
utility out of what is already available
on earth
you
so production is creation of utility
utility means it is the usefulness of a
product it is the bond satisfying
capacity of a product but utility is of
four types first form utility second
place utility third time utility and
finally fourth personal utility now
let's see what is form utility form
utility is changing the form of a good
changing the form of a particular thing
and converting it to something else
something other than what it actually
was I just gave you the example of would
we convert wood into paper so that we
can use it for writing we convert wood
into furniture so that we can keep it in
our houses or office to be used for
sitting
we convert cotton into cloth so that we
can wear it we convert iron into
machines so that we can produce some
Goods so what is happening is these
elements or these things like wood
cotton iron these are already available
to man what man does is he only changes
the actual form of these goods he only
changes the exterior or the physical
form of these things and converts them
into something else
this helps him to satisfy his wants you
might have seen factories which convert
milk which is a raw material into maybe
butter or cheese or ice creams these are
finished goods here the raw materials
are getting converted into finished
goods
next is place utility now what what do
we understand by place utility creating
utility in terms of a place that is
there is a possibility that where the
goods are existing where the goods are
currently they are not giving enough
utility so their place has to be shifted
I mean they have to be shifted from
their current place in order to create
utility so this can possibly be done by
two methods first is extraction now
there are many minerals and metals which
are below the earth's surface in the
mines and nodes like iron like bauxite
now these when they now these metals or
minerals when they are in their OHS or
mines are not of much utility but when
they are extracted they give utility to
us or the other example is let's say
bead now Punjab produces a lot of beef
but in Punjab the utility of bead is not
that much it is only when the weed is
exported or transported from Punjab to
the other states that it creates utility
for other people again in the case of
electronics china produces most of the
electronic
that are currently being used in the
world those electronics give utility to
people in the various parts of the world
but if China didn't export them will
they give utility to those people in
Europe or South America or other parts
of Asia
those Goods won't be able to give the
utility to such people but only when
these goods are transported or exported
from China to the other parts of the
world that they create utility next is
time utility now time utility is
creation of utility in respect of time
with relation to time that means
possibly the time at which the goods are
produced is of importance
some Goods may be produced at a time
when they create utility other Goods may
be produce at a time when they are not
much of any utility
so it is important to produce goods at
the proper time for example we have
rainy season in India from June to
September now in this season people
require a lot of umbrellas and raincoats
so it is important to cater to the
people during this period let's say you
produce goods in winter season you
produce umbrellas and raincoats in
winter season will you be able to sell
them no why because in winter season
these Goods will not give any utility to
people
likewise in winter season woolen clothes
will give utility to people so it is
important that these goods are produced
winter I mean the woollen goods are
produced before winter for people to
have utility in them so type is also
important and finally we have personal
utility now what is personal utility
personal utility is nothing but personal
skills talent experience judgment these
things also help people to provide
utility of already given you the
examples of doctors lawyers Chartered
Accountant even actors musicians sports
persons like cricketers they all give
personal utility because they have the
required skills and talents to be useful
for others so production is nothing but
creating utility production does not
mean creating matter it only means
creating utility out of the available
matter
this is very important